Everything you need to know about the “fiscal cliff”

Mon, 12 Nov 2012 17:19:00 +0000

So the elections are over! Great! Now we can stop paying attention to politics. Well, no. Tomorrow, just one week after the election, Congress reconvenes for a lame duck session to determine what to do about the looming "fiscal cliff." But what is this fiscal cliff anyway that everyone's been talking about? We're glad you asked. It's important! Here's everything you need to know about it.

What is the fiscal cliff?

First of all, it’s not really a cliff (we’ll get to that in a second); rather, it's a series of large tax hikes and spending cuts set to start taking effect in the first few months of the next year -- unless Congress acts to stop it. We’re talking about nearly a $1 trillion in deficit reduction all piled up in the first few months of the year.

Have we been here before?

Good question! Indeed, there have been plenty of times that Congress has faced a deadline when tax cuts would expire or more spending needs to be extended, or the debt ceiling needs to be raised. First, there’s a bunch of things that were set to expire then anyway, as Dec. 31 is a good time to let things end, but what made this the fiscal cliff is that Congress intentionally added a huge set of new problems.

Salon.com > federal budget

Everything you need to know about the “fiscal cliff”