The 'Fiscal Cliff': What Deal Would You Cut?

As Congress negotiates a deal to avoid the so-called "fiscal cliff" on Jan. 1, Massachusetts' congressional representatives have voiced their opposition to any cuts in benefits such as Social Security, Medicare and Medicaid, the Boston Globe reports.

However, there are proposals still on the table that would change those benefit programs, including linking Social Security benefits to a more conservative inflation index that would slightly reduce annual increases, or raising the Medicare eligibility age from 65 to 67.

The Globe reported that while the Bay State's legislators were united against changes to Social Security, there's some wiggle room on Medicare. Rep. Ed Markey opposes raising the Medicare eligibility age; Rep. Michael Capuano would consider raising the age in trade for higher tax rates on the wealthy; and Rep. Richard Neal would consider raising the Medicare age by one month a year.

The so-called fiscal cliff is partly a result of a deal struck in August 2011 to raise the debt ceiling. On Jan. 1, the George W. Bush tax cuts would expire, as would extended unemployment benefits and a payroll tax cut. There would also be $1.2 trillion in spending cuts, an automatic reduction if a joint Congressional committee couldn't come up with a list of cuts to present to lawmakers for approval.

Without a deal to avert the fiscal cliff, a White House report says that a Massachusetts family of four, earning $86,000, would see its income taxes rise by $2,200 a year, the Globe reports.

Some pundits have advocated going over the fiscal cliff—not striking a deal, allowing the tax cuts to expire and spending cuts to go into effect on Jan. 1—as a way to strengthen their side in tax negotations or to rationalize the tax code.

The Tax Policy Center has created a calculator that shows the effect the fiscal cliff would have on different households, and allows comparisons with alternative tax policies presented by both Democrats and Republicans.

And the WBUR program On Point covered in a program this week on tax breaks the painful costs of almost any move, including doing away with deductions  for mortgage, charitable contributions and healthcare insurance.

What deal would you strike to avoid the fiscal cliff? Which tax cuts would you keep and which would you allow to expire? Would you raise the eligibility age for Medicare? Agree to Social Security changes? Do away with the mortgage or charitable contributions deductions? Take a totally different approach? Or advocate going over the fiscal cliff? Tell us in the comments section below.