As I write this, our Congress has yet to come to any sort of agreement on the fiscal cliff issue. On the one hand, we have Republicans who are strongly opposed to (or deathly afraid of voting for) tax increases. On the other hand, we have Democrats who are completely uninterested in “entitlement reform” (read: spending cuts).
There’s still time for me to be wrong about this, but I’ve long expected Congress to let us go over the so-called cliff, thereby letting the Bush era tax cuts expire. From there, they’ll negotiate some (but not all) rates back down, resulting in tax increases for some without anyone having voted for a tax increase.
Sadly, this won’t be enough. As former Romney economic advisor Gregory Mankiw recently pointed out, our fiscal problems run so deep that we’ll likely need to consider tax increases of some sort on a much broader cross-section of Americans, along with serious spending reform, in order to balance the budget going forward.
And now… Here are some articles that caught my eye this past week:
- Cure Yourself of Tiny Details Exaggeration Syndrome – A nice reminder to stop obsessing over your first world problems.
- Predicting Bond Fund Returns – If you want to know how a bond fund is likely to perform going forward, look at the fund’s yield, not past performance.
- Get Ready for Smaller Paychecks in 2013 – A timely reminder. The payroll tax cut expires at the end of 2012 resulting in paychecks that are 2% smaller.
- Why the Numbers Don’t Always Add Up – A nice reminder that (arithmetic) “average” annual returns are a bunch of crap.
- Do You Pay Your Kids for Good Grades? – We don’t, though we do sometimes reward good grades in other ways.
- Should I Tip the Housekeeper? – If you’re going to tip anyone in a hotel, the housekeeper should probably be near the top of the list.
- What’s The Real Value Of Deferring Capital Gains? – Interesting thoughts for those that have considered harvesting capital gains.
Finally, the Carnival of Wealth included my post on mutual fund price drops and the Carnival of Personal Finance included my post the tax benefit of donating appreciated assets. That’s it. Happy New Year.