The United States Fiscal Cliff 2013

Fiscal Cliff. The fiscal cliff is a term referring to the effect of a number of laws which (if unchanged) could result in tax increases, spending cuts, and a corresponding reduction in the budget deficit beginning in 2013. The deficit — the difference between what the government takes in and what it spends — is expected to be reduced by roughly half in 2013. That sharp reduction is the cliff. The Congressional Budget Office (CBO) believes the sudden reduction will probably lead to a recession in early 2013 with the pace of economic activity picking up after 2013.
Budget Control Act 2011. The laws leading to the fiscal cliff include tax increases due to the expiration of the Bush tax cuts and spending cuts under the Budget Control Act of 2011. The Budget Control Act of 2011 was enacted due to the failure of the 111th Congress to pass a Federal Budget and therefore as a compromise to resolve a dispute concerning the public debt ceiling. Deficit spending previously appropriated by Congress was bringing the federal government's total debt close to the statutory ceiling. Republicans in Congress refused to approve an increase in the ceiling unless there were deep spending cuts in order to come closer to a balanced budget and reduce the amount of national debt that was accruing. The Budget Control Act included an immediate increase in the debt ceiling, along with a mechanism for facilitating two additional increases. It also provided for automatic spending cuts to begin on January 2, 2013.



  1. good post z. never took the time to understand what the fiscal cliff was, but you put it in lame-man's terms

  2. Much appreciated. I just wanted to take a moment and share this information with people to give an overall perspective. I'm glad you took a second to read this and increase your knowledge.


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