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How Will the Debt Ceiling Deal Affect Small Businesses?

Guest post by: Lily Faden

Article Overview: What impact will the current debt deal have on small businesses and American citizens?

How Will the Debt Ceiling Deal Affect Small Businesses?

The date has finally arrived: August 2, 2011 - the deadline by which the U.S. government must pass a deal to raise the debt ceiling if our country is to avoid facing catastrophic economic consequences. Somewhat predictably, only hours before the actual deadline, the House has passed a deal that will not only raise the debt ceiling, but also enact other fiscal policies that are aimed at reducing federal government spending. The bill would cut spending by $2.4 trillion over the course of ten years. The Senate is to vote on the same bill at noon eastern time, and it is likely that the bill will be passed. If passed, the policies included in this bill will be a breach from the current administration's history of significant government expenditure on war, social services, and other forms of economic stimulus. Although the bill that has been struck up by Congress does little to please either side of the political spectrum, both parties realize that not passing a bill to raise the debt ceiling will have global repercussions that make any of the current ideological disagreements seem trivial. Republicans are upset that the spending cuts do not extend further, and Democrats are upset that the bill does not include tax increases on the wealthiest sect of American citizens. However, both sides are willing to forgo these arguments for the sake of maintaining the strength of the U.S. dollar and the credibility of the U.S. financial system as a whole.

So how will the current legislation affect small businesses, the middle class, and all other American citizens? The answer largely relies on one's own views about taxation and its impact on the economy. Because the tax cuts will be implemented slowly, many commentators feel that the impacts of this deal will not be felt immediately and will take place gradually over time. Many small business owners will rejoice in the fact that taxes on businesses will not be raised under this deal. But others may see higher taxes and more government spending as the only ways to help alleviate the high unemployment rate that has troubled small business owners for the past few years. It may very well be the case that if this bill is passed, the economy will mostly stay as weak as it has over the past few years, - but American citizens can rest assured that global catastrophe has been avoided.

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Article Tags: debt, debt ceiling, deficit, depression, economy, news, recession, small businesses, spending, taxes, unemployment



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