1. What Is The Fiscal Cliff? Barring any Congressional action, a
series of tax increases and spending cuts will begin Jan. 1.
Observers have named that series of monetary policy actions as
the fiscal cliff because it would send a shock through the U.S.
economy. A number of tax cuts would expire, including several
that lower income and payroll taxes and limit the alternative
minimum tax. Some 90% of Americans would see their taxes rise.
Just as significantly, large amounts would be slashed from the
government budget. This would, for example, reduce spending on
defense and lower some government benefits. Sources:
Congressional Budget Office; Tax Policy Center: Toppling Off The
Fiscal Cliff: Whose Taxes Rise And How?