Consider each of the following:
- Automatic spending cuts (failure of the ‘Super Committee”)
- End of payroll tax cut
- No extension of unemployment benefits
- End of “Bush” tax cuts
- No added stimuli for state and local governments
- Alternative minimum tax
When stimulus is removed, it initially has the opposite effect resulting in less take home pay and potentially an increase in unemployment. Even moving to a neutral position (pre-stimulus) will be a drag on overall economic growth and risks destabilizing our fragile recovery.
As you think about your long-term strategy it’s important to consider the impacts of evolving fiscal policy.