(Bloomberg News) The nation is hurtling toward what has been called “taxmageddon,” the enormous tax increases and spending cuts scheduled for the beginning of 2013. At around the same time, we will also be spending some more quality time with our old friend: the debt limit.
No one can yet see a plausible way through the coming storm. But even though they are not particularly inspiring, paths away from catastrophe do exist.
First, some brief background. At the end of this year, all the Bush tax cuts expire — amounting to about $250 billion a year. The payroll-tax holiday, at more than $100 billion a year, ends too, as do expanded unemployment-insurance benefits. And we face other spending cuts of about $100 billion, from the sequester set up by the 2011 debt-limit deal.