In late February 2012, Ben Bernanke, chairman of the U.S. Federal Reserve, popularized the term "fiscal cliff" for the upcoming reduction in the deficit. Before the House Financial Services Committee he described that "a massive fiscal cliff of large spending cuts and tax increases" would take place on January 1, 2013.
The fiscal cliff would have increased tax rates and decreased government spending through sequestration. This would lead to an operating deficit (the amount by which government spending exceeds its revenue) that was projected to be reduced by roughly half in 2013. The previously-enacted laws causing the fiscal cliff were projected to produce a 19.63% increase in revenue and a 0.25% reduction in spending between fiscal years 2012 to 2013. The Congressional Budget Office (CBO) had estimated that the fiscal cliff would have likely caused a mild recession with higher unemployment in 2013, followed by strengthening in the labor market with increased economic growth.
At 12:01 am EST on January 1, 2013, the US "technically" went over the fiscal cliff.
The fiscal cliff would have increased tax rates and decreased government spending through sequestration. This would lead to an operating deficit (the amount by which government spending exceeds its revenue) that was projected to be reduced by roughly half in 2013. The previously-enacted laws causing the fiscal cliff were projected to produce a 19.63% increase in revenue and a 0.25% reduction in spending between fiscal years 2012 to 2013. The Congressional Budget Office (CBO) had estimated that the fiscal cliff would have likely caused a mild recession with higher unemployment in 2013, followed by strengthening in the labor market with increased economic growth.
At 12:01 am EST on January 1, 2013, the US "technically" went over the fiscal cliff.
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