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What the 'fiscal cliff' deal means for your wallet

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    Impact on the economy in 2013

  • Duration 6:06
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Welcome to The Journal Editorial Report I'm apology go well with no time to spare congress passed and President Obama signed into law this week a bill.

To avoid the so called fiscal cliff.

The New Year's Day deal represents the biggest tax increase the country is seen in twenty years all in return for billions of dollars in new spending and spot and of course as a tax cut.

For the middle class here with a look at what it all means for your pocketbook and the US economy in 2013 Wall Street Journal columnist.

And deputy editor Dan and -- columnist Mary Anastasia O'Grady and senior economics writer.

Steve -- so Steve.

Let's go to you first I think based on our conversations this week you like to steal a little bit more than I do why don't you make the best case.

Four for doing it for four -- the deal.

What -- the suicide for Republicans -- kind of eat your spinach moment I just don't see any other alternative.

To what happened and like I think this is around to deal for so many reasons especially the fact I think it's really helpful the economy.

I guess my point -- would be.

I don't see Republicans have much choice that need to talk to John Boehner yet -- Mitch McConnell what they say -- for 67 weeks the president simply would not budge one inch.

I'm cutting -- he simply had no interest in doing that.

The Republicans believe and I think they were probably right.

That they've gone in the 2013.

Without this tax issue re resolved for a it would just be pummeled day after day -- or hate the DL I just think it was like.

The -- rotten apple that they could have gotten.

-- to deal but had been taken I don't like to -- the spinach.

Metaphor here and if that's good for me in a taste it.

What you got had to tell -- that -- shot.

How much damage is there to the economy from this -- well I prefer -- least rotten apple.

I think -- it really did too big problems here is that people who believe that the rich should pay more do not understand the effects of marginal rates.

And when you -- Smart -- dollar of income that -- -- right so it lowers the incentive.

The people that you want to take risks and innovate and to create so that's one problem -- fact the growth economy.

The problem is it does affect tax revenues and in the guys with the green nice aides keep saying well we raise -- taxes this much we'll get this much more revenue.

But if you lower the incentive of people to take risk generally what happens is that revenue does not that come again.

So you don't get as much as you think you'll.

-- exactly and I everybody here Mary look the economy seems to be the stock market loved this thing right they just blew blew out the next day it's it's been -- for awhile based on the prospect that something would.

Get done housing markets recovering.

I mean the economy the job market not great still 155000.

New jobs but the economy does seem to be doing okay.

Well I think that's probably right economy will do OK but you know when you have unemployment seven point 8% and it's really stubbornly not budging.

You want to do something.

That does something more for the economy that just OK -- muddling through.

I mean if you're the president you can fight back and forth to -- you're not feeling it but there are lots of people who are feeling them Malays in the economy the low slow growth so.

I think it's disappointing that we weren't able to do something that was really more have more of a positive impact.

Dan -- -- there were a couple of big words that after the fiscal -- one was uncertainty in the economy -- that business needed certainty and the other was the prospect of a recession.

I think the deal probably and Donnelley does avoid a recession we're not going to -- negative growth.

But we are probably going to have growth as we have had for about the last two years of 2% or less so we do have an economy but we do have an economy that's bumping along the bottom.

Is the terms of the certainty of the tax deal yes we do have -- happen on the other hand.

The Obama health care law is going to be implemented implemented all through 2013.

-- Wall Street Journal just reported that only 14% this -- -- businesses actually understand the Obama health care law.

So there is a huge on overhang of uncertainty in the plus -- -- which is going to be implemented implemented through the financial industry.

Why we have 2% growth I think those are the reasons we have some positive signals for the economy but not enough to pull -- Steve let me.

Let me see if there's silver lining here at all that may be that the public will begin understand that you can't reduce the deficit.

With a tax increase you just can't do what I mean -- represents what 600 billion dollars they say over ten years that's about six.

7% -- of of of what the deficit -- Good great point -- and by the way -- -- up documents say that you and I am damn America we've lived through the budget deals right for -- 2530 years.

This is the first -- and an almost none of them really worked out very well but this is the first budget deal that I can recall.

I'm dating back to the early Reagan years where they're wet wasn't even three -- of cutting spending you know usually would be three dollars and a pony funny car for a dollar deficit -- there was the that we increase spending and that's the right with the big extension of unemployment short.

Now I think the Republicans.

Are a little bit higher ground as we go forward -- that you -- President Obama.

In his little press conference after -- he signed the bill saying this is only the first of many tax increases to comment 2038.

I and I believe the Republicans are not gonna budge an inch on that I think they're gonna basically say.

Mr.

Obama you got your tax increase on the -- now we have to turn this -- and I think that's where the real fight is that it -- -- I really think that anybody who thinks that this is business and certainty is for me I mean as as Steve just said.

President Obama is already saying he wants more tax increase -- he's not done with that at all.

And there is no solution on the spending side so there's uncertainty out there people are still looking at a very expensive obamacare and no way to pay for if we cannot afford.

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