What Is the Fiscal Cliff, Anyway?
The "fiscal cliff" is a politically manufactured crisis that is more like "steps," Zerlina writes in a piece at Ebony, adding that Americans can rest assured that the end of the world is not upon us if a deal between House Republicans and the president isn't reached by the deadline on Dec. 31.
First of all, it's important to understand that the "fiscal cliff" is a politically manufactured crisis and that it isn't actually a cliff at all. It's more like "steps" or as MSNBC's Steve Kornacki explained, a "fiscal slope." Thus, the breathless coverage in the media is somewhat misleading. If a deal between House Republicans and the president isn't reached by the deadline on December 31st, rest assured that the end of the world is not upon us.
However, a few things will happen on this much talked about December 31st deadline. First, the Bush tax cuts will expire. All of them. At the same time, as a result of the sequestration deal last year, spending cuts also are triggered. Non-partisan experts warn that this combination oftax increases and spending cuts could send the economy back into another recession if left unresolved.
Ordinary Americans would feel an impact from the tax increases immediately, as payroll taxes and the alternative minimum taxes go up. The unemployment rate could go back up to over 9% and economic growth could be reduced by 0.5%. And, of course, the stock market would not react kindly to this level of instability in the American economy.
Read Zerlina Maxwell's entire piece at Ebony.
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