We’ve been told that if a fiscal
cliff staircase deal doesn’t get done by 1/1/13, whenever it does get done, it will be retroactive to the beginning of 2013 as to middle class taxes, so their taxes really won’t go up.
But Timothy Geithner also has the power to keep payroll withholding the same next year*, so not only won’t taxes go up, but paychecks will stay the same even without a deal.
Keeping consumer spending power the same goes a long way to controlling economic damage from the failure to make a deal. Hang tough, Mr. President.
See “Geithner Keeps Withholding Freeze as Weapon to Curb Cliff,” Richard Rubin, Bloomberg