2013 March 01
The term “Fiscal Cliff” was coined by Ben Bernake, chairman of the Federal Reserve, and used to describe the effects of the debt ceiling deal from 2011. Although it was a phrase widely used by politicians and members of the media alike, much was left unexplained about this so called “Fiscal Cliff” and how it relates to our most recent financial conundrum, “The Sequester.”
The “Fiscal Cliff” was a result of a combination of deadlines from the Budget Control Act of 2011 (S 365) and the Temporary Extension of Tax Relief of 2010 (HR 4853). The BCA created a “Joint Select Committee on Deficit Reduction” which was tasked with establishing a plan to reduce the deficit and debt. If this committee could not agree on a workable plan to accomplish this, certain cuts would go into effect January 1, 2013.
In the week before the deadline, HR 8, the Job Protection and Recession Prevention Act of 2012, was passed. This bill Extends the Economic Growth and Tax Relief Reconciliation Act of 2001 from December 31, 2012 to December 31, 2013 (which you can find in section 102 of the text). It also requires Congress to introduce a bill to provide for “comprehensive tax reform” no later than April 30, 2013, and requires this bill to be expedited through the House of Representatives and the Senate (found in section 203). You can read the full text and other highlights of the bill from Vote Smart here. And don't forget to check back- our full synopsis ...