NEW YORK ( TheStreet) -- While President Obama and the beloved members of Congress are focused on the November elections, the looming "Fiscal Cliff" is of paramount importance to the economy.
As part of a grand bargain between both major parties and the president to raise the federal debt ceiling, the Budget Control Act of 2011 -- signed into law by President Obama in August 2011 -- a mandatory set of budget cuts, together with the expiration of tax cuts enacted when George W. Bush was president, and then extended in 2010, "will push the U.S. into a recession in the first half of 2013," according to KBW analyst Fred Cannon, unless Congress and the president once again kick the can down the road.
Since the only thing that matters to most members of Congress is the subsequent election cycle, it would seem most likely that another bill will be passed to prevent the federal spending cuts and to extend the tax cuts once again, but one never knows. The bitterness between the parties, together with the election results, could indeed push us over the fiscal cliff.
For income seeking investors, TheStreet recently covered the significant tax implications that will affect investors unless Congress extends the tax cuts, as well as several choices to maximize dividend income under various scenarios.KBW's "base-case economic outlook" assumes that Congress and the president will take the necessary actions to avoid the fiscal cliff, but Cannon said that even under that "even if the fiscal cliff is addressed by Congress, we believe that the December debate on the issue will be negative for consumer confidence and will slow spending." After that, assuming that we don't fall off the fiscal cliff, KBW expects the economy to "
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV