FISCAL CLIFF jumping.

The media has built up the huge cliff for us all to jump off of just after a new year celebration full of calamity.

The government, on the other hand has been working hard to put an elevator on that cliff, so we wouldn’t have to jump.  The elevator was composed that weekend by Vice President Joe Biden and Senate Mitch McConnel.

The cliff was originally constructed by the preceding Bush administration through a variety of tax changes. 

Where we stand, now:

The Bush-era income tax rates will be permanently extended for all income up to $400,000, and $450,000 if you are married. Bush tax cuts that apply to income above those levels will expire.  The compromise bill, from Biden and McConnel, would also preserve the expanded parameters for the American Opportunity Tax Credit, the Child Tax Credit and Earned Income Tax Credit for 5 more years.

The income exemption levels for the Alternative Minimum Tax for inflation have been permanently adjusted.  The Biden-McConnell compromise will reinstate limitations on how much those making $250,000, and married couples making $300,000, may take in itemized deductions and personal exemptions. The bill will extend ,two more years,  several tax breaks for businesses, including a production tax credit for developers of wind projects, the research and development tax credit, and a measure allowing for bonus depreciation. The compromise bill will extend for one or two years a few "temporary" tax breaks for individuals that regularly are extended. These include an option to deduct state and local sales taxes in place of state and local income taxes; and a deduction for elementary and secondary school teachers for certain expenses. The legislation will preserve the current estate tax exemption level of $5.12 million but index it to inflation for future years. And it will raise the top rate to 40% from 35% currently. The bill will continue a federal extension of unemployment benefits for one year. The Biden-McConnell compromise will prevent a scheduled 27% cut in reimbursement for Medicare services for one year. The so-called "doc fix" will boost the deficit by $31 billion.

The new deficit is a different story.  Put on your thinking caps, U.S. government.