Here’s a great article on what the Fiscal Cliff is from the Washington Post.
The term “fiscal cliff” is Washington shorthand for a series of automatic spending cuts and tax increases set to take effect in January. If enacted, they would amount to the largest spurt of deficit reduction in more than 40 years but could also push the country back into a recession. The cuts include about $100 billion in automatic cuts to defense and domestic government spending. The plan also includes about $400 billion in tax hikes, caused primarily by the expiration of a temporary payroll tax cut and other income tax breaks adopted during the George W. Bush administration. In addition, more than 26 million households will for the first time face the alternative minimum tax, which threatens to tack $3,700, on average, onto taxpayers’ bills for the current tax year. Leaders from both parties say they are determined to head off the fiscal cliff. But some Democrats and policy analysts have suggested it might be better to actually go over the cliff. Once the tax hikes have kicked in, these “cliff divers” argue, Republicans would be hard-pressed to roll them all back and would have to accept a deal on taming the deficit that contains more new tax revenue than GOP lawmakers want.
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