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What is the Fiscal Cliff?

Khaos_Mage
Posts: 23,214
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11/15/2012 2:01:09 PM
Posted: 4 years ago
At 11/15/2012 1:47:48 PM, MilitaryAtheist wrote:
I keep reading about it. I know it will do sh!t to the USA, but just what?

I thought this cliff was regarding the debt and whatnot, but apparently, it is nothing more than the Bush tax cuts expiring, a few other tax issues that are dealt with annually, and the kick-in of the "automatic" spending cuts agreed to whent the debt ceiling was raised last time.

So, basically, taxes will go up to Clinton era rates, and the annual patches will be addressed (as they usually are), and $120 billion in cuts will be mandatory. This shouldn't be armegeddon as it is portrayed, and it should have been dealt with much, much earlier.
In fact, I believe that part of the reason the recession has lasted so long is because the tax code has been held hostage for about three years now, and no one knows what's going to happen, thus people are waiting.
My work here is, finally, done.
RoyLatham
Posts: 4,488
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11/16/2012 9:59:23 AM
Posted: 4 years ago
The "fiscal cliff" is the expiration on January 3 of the Bush tax cuts and the temporary lowering of payroll taxes. The Bush tax cuts include the creation of a new 10% tax bracket on the low end, which would then become 15%. Tax revenues are projected to increase by about $300 billion overall. Separately, "sequestration" legislation requiring $110 billion cuts in defense and in entitlements would become law.

Currently the US collects about $2.3 trillion in taxes and spends about $3.5 trillion.

There is virtually universal agreement that failure to avoid the fiscal cliff would put the economy into recession.