| What is the Fiscal Cliff?
The "fiscal cliff" is a term that is now commonly used describe U.S. federal tax increases and spending cuts that are due to take effect at the end of 2012 and early 2013, assuming no action taken by the President and Congress to rein in the budget deficits.
These measures are set to automatically slash the federal budget deficit by $503 billion between Fiscal Year 2012 and Fiscal Year 2013, according to the most recent Congressional Budget Office (CBO) projections.
The impact of these cumulative tax increases and spending cuts would result in a abrupt contraction of approximately 4% of the US GDP, and has led most experts to "warn of a double-dip recession and rising unemployment in 2013 if Washington fails to intervene in a timely fashion."
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