What Is the Fiscal Cliff and How Will It Impact Our Economy?

Due to a combination of expiring tax cuts and new spending cuts, if Congress does not act within the month we could be about to see $607 billion of deficit reduction take place heading into 2013 - more likely closer to $560 billion incorporating in the likely economic feedback to such large changes. Simply put, a vast number of policy changes are set to kick in approximately all at the same time.
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What Is The FISCAL CLIFF And How Will It Impact The Economy? The Fiscal Cliff could lower the national deficit by up to $607 billion in 2013 — but at what cost to jobs and our economy? If Congress can't reach a deal by 2013, all of this kicks in: $607 BILLION TOTAL $399 BILLION (66.7%): Changing Tax Provisions 221b: Expiring Bush-era tax cuts and provisions 95b: Expiring Payroll tax holiday 65b: Other expiring tax provisions 18b: New taxes from Affordable Care Act $103 BILLION (17.0%) : Forced Spending Cuts 65b: Forced Cuts by the Budget Control Act 26b: Expiring unemployment insurance l1b: Reduced Medicare physician payments $105 BILLION (17.3%) : Revenue and Spending Changes Outcomes If We Go Over The Cliff: Deficit Reduction The largest single deficit reduction in US history, it could reduce the deficit up to $607 in 2013 - by 5.1% of 2012-2013 real GDP Economic Contraction Real GDP could drop by 0.5% in 2013 leading to a possible recession, and financial markets could suffer due to increased caputal gains taxes. Jobs Unemployment could spike up to 9.1% by Q4 2013, Tax Increases Almost 90% of Americans taxes would go up, with the average taxpayers's bill going up $3,446 in 2013 Up Next For Congress and Obama: 1. Reach deal by end of 2012 or I)uSh to 2013. 2. Vote to raise Debt Ceiling in February. 3. Pass next Continuing Resolution by March 27th. nerdwallet we do the homework for you