Fiscal Cliff Averted, $4 Trillion in Debt Added

As we welcome 2013, we can also welcome the passing of legislation to avert the fiscal cliff.

Tuesday night, the House approved the deal that was a final effort to avert $600 billion in tax hikes and spending cuts that went into effect that morning.

But not all are welcoming the deal with open arms. As an eleventh-hour solution, the legislation is not without major flaws.

And the largest of these flaws is the disregard for the national deficit...

According to the Congressional Budget Office, the legislation passed Tuesday night will increase the national deficit by $4 trillion over the next decade. This year alone, the deficit will be $330 billion more than if the nation had gone over the fiscal cliff.

For his part, the President was more concerned about averting the tax hikes and spending cuts, brushing off the deficit to a later date.

From the Telegraph:

“There's more work to do to reduce our deficits, and I'm willing to do it. But tonight's agreement ensures that, going forward, we will continue to reduce the deficit through a combination of new spending cuts and new revenues from the wealthiest Americans,” Obama said.

But talk of deficit can't be postponed for long. In two months, the nation will run the risk of defaulting.

From the Washington Post:

“What's challenging is that we're still going to have some slowing in growth because of the tax hikes,” said [J.P. Morgan Chase's Michael] Feroli, who estimated Tuesday that the deal will subtract 1 percentage point from already meager growth. “What's not good is that deficits are still going to be large and it doesn't begin to touch the long-term horizon.”

But the deal extended tax breaks for taxpayers making less than $450,000 and extended benefits for over 2 million people collecting unemployment checks. It averted massive tax hikes and cuts from a number of government benefit programs.

We just have to hope the deficit is addressed before the next deadline.