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The Fiscal Cliff Coming Sooner Than You Think

According to the Bi-Partisan Policy Center a set of major tax and spending policy changes are scheduled to occur on January 1 and 2, 2013.

Unless Congress intervenes, these changes will have a substantial impact on the federal budget and the economy at large. The term fiscal cliff was used by Federal Reserve Chairman Ben Bernanke when he warned of the harm that the American economic recovery would face if Congress does not act.

At midnight on December 21, 2012 the United States will be faced with what is being called the “fiscal cliff.” In short this cliff is composed of several parts.

1. The payroll tax reduction passed in 2010 will end.
2. The temporary tax rates passed under President Bush will lapse.
3. Obamacare’s taxes will come due.
4. The Alternative Minimum Tax will expand to many more taxpayers.
5. Extended unemployment benefits will expire.
6. Some $78 billion in federal spending will be sequestered.
7. Medicare “doc fix” will expire.

Below timeline courtesy of the Bi-Partisan Policy Center:

Fiscal Cliff Timeline

NOVEMBER – DECEMBER
BPC ESTIMATE LATE NOV – DEC 31, 2012
  • Debt limit reached
JANUARY
JAN 01, 2013
  • FISCAL CLIFF IMPACT, CALENDAR YEAR 2013: $661 BILLION
  • Expiration of 2001, 2003, and 2009 tax cuts ($281 billion)
  • Expiration of payroll tax holiday ($115 billion)
  • Deadline for addressing tax extenders and business depreciation ($75 billion)
  • Expansion of Alternative Minimum Tax ($40 billion)
  • Expiration of extended unemployment benefits ($34 billion)
  • Imposition of Patient Protection and Affordable Care Act taxes ($24 billion)
  • Expiration of Medicare “doc fix” ($14 billion)
JAN 02, 2013
  • Imposition of sequester cuts ($78 billion)
JAN 03, 2013
  • 113th Congress convenes
JAN 20, 2013
  • Presidential Inauguration Day
FEBRUARY
BPC ESTIMATE FEB, 2013
  • “Extraordinary measures” exhausted
MARCH
MAR 27, 2013
  • Expiration of Fiscal Year 2013 continuing resolution
  • Expiration of Temporary Assistance for Needy Families (TANF)

BPC logo

Dr. Richard Swier

Dr. Rich Swier is Publisher of www.DrRichSwier e-Magazine. Twitter: @drrichswier He holds a Doctorate of Education from the University of Southern California in Los Angeles, CA, a Master's Degree in Management Information Systems from the George Washington University, Washington, D.C., and a Bachelor's Degree in Fine Arts from Washington University, St. Louis, MO. Richard is a 23-year Army veteran who retired as a Lieutenant Colonel in 1990. He was awarded the Legion of Merit for his years of service.

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Categories: Budget and Finance, Must Read, News

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