Fiscal Cliff Essay

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Ryan Sweeney Mr. Keivit Economics 11/28/12 The Fiscal Cliff On August 2nd of last year President Barack Obama signed The Budget Control Act of 2011 into law. This act ended the United States government’s concerns on the debt-ceiling crisis that had started earlier in the year. Yet this is only one of the many affects, both positive and negative, that this act had on our government. One, and probably the most significant, of these affects is that if congress does not suggest another deficit-postponing deal by December 31 then the fiscal cliff may start to dissipate our countries financial resources. This “fiscal cliff” was a term coined by Federal Reserve Chairman Ben Bernanke when he was being interviewed after the first release of news of this financial deficit that will take place somewhere around New Years. The term fiscal cliff’s literal definition is a series of budget cuts and tax increases. It is predicted that the consequences of the fiscal cliff will grossly affect things such as Medicare, Unemployment, and National Defense. We can also expect there to be more taxes and add-ons that will affect different types of American citizens. One of these being a new tax for some married couples that have children that’s cost can range from four to five thousand dollars every year. There will also be a two percent tax increase for a majority of American workers due to the expiration of the temporary 2011 pay roll tax cut. There are three different ways in which U.S. lawmakers can overcome the fiscal cliff, all of which have an atrociously negative effect on the economy. One of these is allowing the current policy that starts at the beginning of 2013 to go into effect. This would greatly increase the amount of tax and spending cuts and could ultimately send the United States back into a recession, but it would cut the deficit in half.

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