Understanding the Fiscal Cliff

fiscal cliff political cartoon

What is the fiscal cliff?
Investopedia defines Fiscal Cliff as "a combination of expiring tax cuts and across-the-board government spending cuts scheduled to become effective Dec. 31, 2012." It is thought that by not extending certain tax cuts and by having an automatic decrease in government spending the country will be sent back into recession due to decreased household incomes and a potential for increased unemployment.

The what-if of the Bush-era Tax Cuts, expiration or partial extension: The nonpartisan Tax Foundation has developed a calculator, My Tax Burden that helps to determine a person or household's potential tax burden under a variety of tax-cut & increase scenarios. Also of possible interest from the Tax Foundation: How would the fiscal cliff affect typical families in each state? and The Fiscal Cliff primer.

Track government spending: Everyone knows spending more money than you make is a formula for disaster. Keep an eye on the nation’s finances just as you do for your own household budget.

  • Federal Government Receipts and Spending: The Bureau of Labor Statistics lays out what the government earns and spends.
  • The Debt to the Penny &  Who Holds It: Who exactly owns the U.S. debt? Dunno if the branches get this question, but in the Research Center, we certainly do. Luckily, the Treasury Department is here to help with a day by day account of how far in debt we are and who’s carrying the note (it’s a very long string of numbers).
  • FedSpending.org: A project of OMB Watch helps to keep citizens up to date with where their tax dollars are being spent.
  • The Sunlight Foundation: A nonpartisan organization that is helping to shed light on money and influence in government.

Let your voice be heard:  A few ways to exercise your democratic voice: first, vote and then follow up with phone calls, emails, faxes or letters (take advantage of phone and email, letters do have to be irradiated so might not get to your Congressperson in time). No matter what your stance, let your voice be heard.

Keep up on all of the latest news, discussion, and possible outcomes of the fiscal cliff conundrum.