Fiscal Cliff Avoided, but Debt Ceiling Looming

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It's the day after Congress finally reached an agreement to prevent the nation from falling off the fiscal cliff, but financial experts say there are still terms of this deal that leave more questions than answers.

"The fiscal cliff has the spending cut side, and the tax increase side. Unfortunately they really weren't able to make any decisions on the spending cuts side, but they did iron out how our taxes will look for the next year at least," said Certified Financial Planner Jeanne Fisher.

The deal did accomplish some key provisions. It extended unemployment benefits for one more year, but it also ended the payroll tax holiday, meaning your taxes will go up two percent.
Congress redefined the threshold for the Bush-era tax cuts, which will increase various tax rates for those making more than $400,000 a year, and $450,000 for families.

When it comes to spending, the automatic federal spending cuts have been delayed until March, and that's where it gets messy.

"It is already anticipated that we will reach the new debt ceiling of 16.3 trillion by March, so they're going to have to make a decision on are we going to cut spending... where are we going to cut spending... or are we going to raise the debt ceiling," said Fisher.

It's the answer to the debt ceiling crisis that every taxpayer awaits.

"At the end of the day, either we have to make spending cuts, or we have to raise taxes, we can't have everything and not pay for it," said WKU Graduate Student Will Simpson.

As for today, the stock market didn't seem to reflect the treacherous road ahead, but Fisher says that can always change.

"The market is responding positively to the fact that we have a deal at all, but it's a new day today, and tomorrow, there will be a new problem," said Fisher.

Fisher says the u-s is expected to reach the debt ceiling by March. and your paycheck is likely to shrink.

The Senate vote to pass the deal was 89 to 8, while the House was much closer with 257 to 167.

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