House Speaker John Boehner and President Barack Obama aren't out of the woods yet on fiscal discussions. (photo by Olivier Douliery/flickr)
By Zach Dietmeier
NORMAL - Now that the fiscal cliff has been averted, what can the American taxpayer learn?
The compromise at the edge of the cliff doesn't end U.S. financial problems, reminds one Illinois State University economic expert. Professor of finance Edgar Norton said the agreement brings some good and some bad, but most of all it needs to correct the focus of Congress.
"We can come up with a plan and we don't need Draconian cuts right now," said Norton. "All we need to do is bend the curve down so that spending increases don't keep on rising so much year by year. We need to reduce that rate of growth and spending."
The deal raises taxes on those making more than $400,000, while saving the Bush-era tax cuts for those making less.
According to Norton, we can start with the fact that things in Washington might not be as bad as they could be.
"Back in the old days, Aaron Burr and Alexander Hamilton took out their differences in a field, and Mr. Hamilton got shot," said Norton. "From that persepective, what's happening now may not be all that bad, but we have to work together."
On one hand, Social Security and the Bush tax cuts were saved. On the other, the national defecit stays the same and the compromise made the tax code more complex.
"This scenario has been a perfect example of how disfunctional our government and even here in Illinois our state is with big decisions," said Norton. "I think it's the nature of the political beast: we don't want to make the tough decisions. It's a lot easier to cut taxes than to raise, and it's a lot easier to increase rather than cut spending."
Norton also said while unpopular, returning the payroll tax to previous numbers is a good thing for the long term.