Despite all of the domestic and global political and economic uncertainties that persisted throughout 2012, the Dow Jones Industrial Average (chart) managed to gain 7.3% for the year, the Nasdaq (chart) soared 15.9%, the S&P 500 (chart) leaped by 13.4% and the small-cap Russell 2000 (chart) closed the year up notching a 14% gain. I think most investors and traders were caught off guard with the double digits gains that occurred in 2012, especially with the pending fiscal cliff dilemma that our country is facing. However, in the wee hours of this morning the Senate did overwhelmingly approve a bipartisan deal that is now headed over to the House for a vote. Here is what part of the revised deal looks like:
The new deal postpones for two months the start of $1.2 trillion in automatic spending cuts over 10 years, known as the “sequester.” For those two months, $24 billion in savings would be substituted. Half of those savings would be split between defense and non-defense programs. The other half includes new revenues.
Raises $600 billion in revenue over 10 years through a series of tax increases on wealthier Americans.
Permanently extends tax cuts made in 2001 by Republican President George W. Bush for income below $400,000 per individual, or $450,000 per family. Income above that level would be taxed at 39.6 percent, up from the current top rate of 35 percent.
Above that income threshold, capital gains and dividend tax rates would return to 20 percent from 15 percent.
Includes a permanent fix for the alternative minimum tax.
Extends child tax credit, earned income tax credit, and tuition tax credit for five years.
Extends unemployment insurance benefits for one year for 2 million people.
Avoids a cut in payments to doctors treating patients on Medicare – the so-called “doc fix.”
Temporarily extends farm programs.
So now we have to wait and see if the House of Representatives will pass this modified deal and hopefully we can get that answered today.
Have a very safe, healthy, prosperous and Happy New Year 🙂
All the best,
~George Â