Changes

The "'''Fiscal cliff'''" is the combination of United States financial policy changes that were scheduled to take effect at the start of 2013.  The [[Congressional Budget Office]] has predicted that if those policies are allowed to take effect, they will place the United States economy into a [[recession]].<ref name="nytrecession">{{cite news |title=Recession Possible if Impasse Persists, Budget Office Says |last=Calmes |first=Jackie |url=http://www.nytimes.com/2012/05/23/business/congressional-budget-office-warns-of-a-fiscal-cliff.html?_r=1&src=recg |date=May 22, 2012  |newspaper=The New York Times  |accessdate=October 19, 2012}}</ref>  On February 29, 2012, [[Ben Bernanke]] coined the term "fiscal cliff" in his testimony before the House Financial Services Committee.<ref name="Reuters-Bernanke-1202">{{cite web |title=Highlights: Bernanke's Q&A testimony to House panel |author=Washington newsroom |url=http://www.reuters.com/article/2012/02/29/us-usa-fed-bernanke-idUSTRE81S1DO20120229 |date=February 29, 2012 |publisher=Reuters |accessdate=October 19, 2012 }}</ref><ref name="CNBC120621">{{cite web|url=http://finance.yahoo.com/news/fiscal-cliff-may-europe-look-154128079.html |title= 'Fiscal Cliff' May Make Europe Look Like a Dip |first=Jeff |last=Cox | work=CNBC  |date=June 21, 2012 |publisher=Yahoo! Finance}}</ref>

The "'''Fiscal cliff'''" is the combination of United States financial policy changes that were scheduled to take effect at the start of 2013.  The [[Congressional Budget Office]] has predicted that if those policies are allowed to take effect, they will place the United States economy into a [[recession]].<ref name="nytrecession">{{cite news |title=Recession Possible if Impasse Persists, Budget Office Says |last=Calmes |first=Jackie |url=https://www.nytimes.com/2012/05/23/business/congressional-budget-office-warns-of-a-fiscal-cliff.html?_r=1&src=recg |date=May 22, 2012  |newspaper=The New York Times  |accessdate=October 19, 2012}}</ref>  On February 29, 2012, [[Ben Bernanke]] coined the term "fiscal cliff" in his testimony before the House Financial Services Committee.<ref name="Reuters-Bernanke-1202">{{cite web |title=Highlights: Bernanke's Q&A testimony to House panel |author=Washington newsroom |url=https://www.reuters.com/article/2012/02/29/us-usa-fed-bernanke-idUSTRE81S1DO20120229 |date=February 29, 2012 |publisher=Reuters |accessdate=October 19, 2012 }}</ref><ref name="CNBC120621">{{cite web|url=http://finance.yahoo.com/news/fiscal-cliff-may-europe-look-154128079.html |title= 'Fiscal Cliff' May Make Europe Look Like a Dip |first=Jeff |last=Cox | work=CNBC  |date=June 21, 2012 |publisher=Yahoo! Finance}}</ref>

The policy elements of the fiscal cliff include:  

The policy elements of the fiscal cliff include:  

==Democratic proposals==

==Democratic proposals==

President Obama proposed to extend the Bush tax cuts for all taxpayers on just the first $250,000 of annual income. On July 25, 2012 the U.S. Senate voted 51-48 to pass a bill supporting the President's tax proposal, while rejecting the Republican proposal of extending the tax cuts for all 45-54.<ref>[http://www.cnn.com/2012/07/25/politics/senate-tax-vote/index.html?hpt=hp_t1 CNN-Senate passes Democratic tax plan, rejects GOP version-July 2012]</ref> The U.S. House of Representatives rejected, 170-257, the President's tax proposal on August 1, 2012.<ref>{{cite web|last=Rubin|first=Richard|title=House Rejects Obama’s Proposed Tax Boost on Top Earners|url=http://www.bloomberg.com/news/2012-08-01/house-rejects-obama-s-proposed-tax-boost-on-top-earners.html|publisher=Bloomberg|accessdate=October 19, 2012}}</ref>

President Obama proposed to extend the Bush tax cuts for all taxpayers on just the first $250,000 of annual income. On July 25, 2012 the U.S. Senate voted 51-48 to pass a bill supporting the President's tax proposal, while rejecting the Republican proposal of extending the tax cuts for all 45-54.<ref>[https://www.cnn.com/2012/07/25/politics/senate-tax-vote/index.html?hpt=hp_t1 CNN-Senate passes Democratic tax plan, rejects GOP version-July 2012]</ref> The U.S. House of Representatives rejected, 170-257, the President's tax proposal on August 1, 2012.<ref>{{cite web|last=Rubin|first=Richard|title=House Rejects Obama’s Proposed Tax Boost on Top Earners|url=https://www.bloomberg.com/news/2012-08-01/house-rejects-obama-s-proposed-tax-boost-on-top-earners.html|publisher=Bloomberg|accessdate=October 19, 2012}}</ref>

Although President Obama asked Congress to remove the Bush tax cuts for the middle class from the debate, the failure of the House to accept his plan and the failure of the Senate to extend all Bush tax cuts implies that the cuts will be allowed to expire as provided in existing law.  Congress will then claim that they are not raising taxes, but just failing to vote to lower them.

Although President Obama asked Congress to remove the Bush tax cuts for the middle class from the debate, the failure of the House to accept his plan and the failure of the Senate to extend all Bush tax cuts implies that the cuts will be allowed to expire as provided in existing law.  Congress will then claim that they are not raising taxes, but just failing to vote to lower them.

*allows taxpayers to convert 401(k) retirement plan balances to Roth 401(k) plans (thereby accelerating the payment of taxes)

*allows taxpayers to convert 401(k) retirement plan balances to Roth 401(k) plans (thereby accelerating the payment of taxes)

On January 4, 2013, the CBO issued a summary of the impact of the law.<ref>{{cite news|url=http://thehill.com/blogs/on-the-money/economy/275095-cbo-fiscal-cliff-deal-carries-4-trillion-price-tag|title=

On January 4, 2013, the CBO issued a summary of the impact of the law.<ref>{{cite news|url=https://thehill.com/blogs/on-the-money/economy/275095-cbo-fiscal-cliff-deal-carries-4-trillion-price-tag|title=

CBO: 'Fiscal cliff' deal carries $4 trillion price tag over next decade|first=Peter|last=Schroeder|work=The Hill|date=January 1, 2013|accessdate=January 3, 2013}}</ref>  It found a $3.9 billion increase in the deficit over 2013-2022 compared with the existing law allowing the economy to "go over the cliff."  However, it projected a -0.5% immediate GNP hit on the economy under the existing law compared with a 1.5% to 1.75% GNP growth under the new law in 2013.  Over the long term, the CBO projects that under the new law, GNP "would be 1.7 percent lower in 2022 than would have been the case under prior law."<ref>{{cite web|url=http://www.cbo.gov/publication/43835?utm_source=feedblitz&utm_medium=FeedBlitzEmail&utm_content=812526&utm_campaign=0|title=The "Fiscal Cliff" Deal|work=Congressional Budget Office|date=January 4, 2013|accessdate=January 6, 2013}}</ref>

CBO: 'Fiscal cliff' deal carries $4 trillion price tag over next decade|first=Peter|last=Schroeder|work=The Hill|date=January 1, 2013|accessdate=January 3, 2013}}</ref>  It found a $3.9 billion increase in the deficit over 2013-2022 compared with the existing law allowing the economy to "go over the cliff."  However, it projected a -0.5% immediate GNP hit on the economy under the existing law compared with a 1.5% to 1.75% GNP growth under the new law in 2013.  Over the long term, the CBO projects that under the new law, GNP "would be 1.7 percent lower in 2022 than would have been the case under prior law."<ref>{{cite web|url=http://www.cbo.gov/publication/43835?utm_source=feedblitz&utm_medium=FeedBlitzEmail&utm_content=812526&utm_campaign=0|title=The "Fiscal Cliff" Deal|work=Congressional Budget Office|date=January 4, 2013|accessdate=January 6, 2013}}</ref>