The looming fiscal cliff is all over the news with lots of people wringing their hands about trying to stop it from happening. But what is it and why should you care?
The term “fiscal cliff” is a term being used in Washington as a short-hand way of describing a combination of tax increases and spending cuts scheduled to take effect on Jan. 1 if Congress cannot reach a compromise and change current law. The mix includes the Bush-era tax cuts, the 2010 Obama tax holiday, partial expensing of investments, and the onset of tax provisions to support the implementation of the 2012 Affordable Health Care Act. In addition to these tax provisions are federal government spending measures that include the expiration of emergency unemployment benefits, a scheduled reduction in Medicare payments to doctors and other health care providers, and automatic, across-the-board cuts in discretionary defense and non-defense spending. These last automatic cuts are what have been referred to as “sequestration.”
Unless Congress can reach an agreement on changing the laws, military people will be affected by some or all of the following: the automatic cuts in defense spending, the cuts in payments to Medicare providers, and tax increases.
TREA: The Enlisted Assn. has been fighting hard to stop the pending Medicare cuts, since they will also affect TRICARE, as well as the cuts in military medical care benefits that have been proposed as a result of the pending defense budget cuts. No one knows what will happen because Congress has a very short amount of time to deal with these major issues. Our best guess is that they will come to some short-term agreement to stop the fiscal cliff for two or three months and let the new Congress which comes into office in January try to work out long-term agreements. But that is only a guess.