What happens If we go over the fiscal cliff?

By Naureen Khan

December 27, 2012

President Obama and lawmakers were expected to return to Washington this week in a last-ditch attempt to keep the country from plunging over the so-called “fiscal cliff” after last week’s breakdown in negotiations. Some economists have said the toxic cocktail of spending cuts and tax increases, slated to begin taking effect in the New Year, has the potential to knock the country into another recession, but with a mere four days to go until the deadline, hopes are waning that the nation’s leaders will be able to come to a palatable agreement.

National Journal has a refresher course on exactly what going over the cliff would mean over the next year and in the long-term.

Taxes

Spending Cuts

What happens next in Washington?

Some have termed the fiscal cliff more of a slope, because many of the tax provisions will not take effect until Americans file their income taxes and because it will also take some time for the effects of the spending cuts to be felt. That gives lawmakers slightly more wiggle room—as in the country could fall off the cliff, and Congress would feel an added urgency to iron out a deal when it reconvenes in January, with Americans already beginning to feel its effects. Congress could also punt, voting to override the sequester and extend the Bush tax cuts and the payroll holiday, while vowing to take up the big deficit-reduction and tax reform debate at a later date—although we’ve all seen how that plan has played out in the past. 


By Naureen Khan

December 27, 2012

http://www.govexec.com/oversight/2012/12/what-happens-if-we-go-over-fiscal-cliff/60362/