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An Up-Close Look at America’s Fiscal Cliff
Posted by Randy | November 19, 2012
The term “fiscal cliff” was coined by Ben Bernanke, Chairman of the Federal Reserve, in early 2012, when he testified before Congress saying, “Under current law, on January 1st, 2013, there is going to be a massive fiscal cliff of large spending cuts and tax increases.”  The phrase quickly gained popularity as a useful catch-all to describe a combination of year-end policy events including significant impending tax increases, sharp sequestration budget cuts, and the expiration of several stop-gap provisions ranging from doctor reimbursements to unemployment benefits.

Today, the term “fiscal cliff” dominates the local headlines, national news, and blogosphere.  But what exactly is the fiscal cliff and how does it impact you? I have put together this primer to break down the fiscal cliff, to share facts on how these policies might impact you and your job, and to offer my views on how we can avert our nation’s most pressing and significant challenge.


Please share this primer with others that might find it informative.  Then, weigh in below, take my instapoll, join the discussion on Facebook or e-mail me via my webform.  Your voice is important.  I look forward to hearing from you.
Comments
Users are solely responsible for the opinions they post here and their comments do not necessarily reflect the views of Congressman Forbes.
  • James Hunter commented on 11/19/2012
    Thanks for sending out the Primer. I found this to be very informative for the casual reader. My only complaint is that you introduce the document by stating that you are willing to work with Democrats and Independents, and then later on list negative references where President Obama did this or the Obama Administration did that. After listening to all of negative campaign ads during the election season, I am ready for each party to stop the finger pointing and work on solving the problem. Let us move forward as a nation united once and for all.
  • Wayne Ballard commented on 11/19/2012
    I do not mind paying my fair share of taxes, but when large corporations make billions a year and pay little or no taxes, that I mind. Oil companies, like Exxon Mobil, which in 2011 only sent 2 percent of its $73.3 billion earnings to the IRS. They need to pay their fair share. And more than likely, they got all that back plus more because to subsidies and rebates. As ExxonMobil demonstrated in 2009, it is possible for a company to earn $19 billion in profits in a single year and not pay a dime in U.S. income taxes. So, close the loopholes and limit subsidies and make the rich and large corporations pay their fair share. The "FISCAL CLIFF" is a scare tactic for big business to keep their tax breaks. The Senators and Congressmen need to do what they were elected to do, work for ALL the people, not just corporations and rich that back their elections. If not, next election, they may be out of a job.
  • Elsie Daniels commented on 11/19/2012
    Everything that is mentioned involves something from the middle class. These things have been referred to as gifts. Isn't it a gift to the wealthy when loopholes and benefits that can only be accessed by the wealthy are not factored into helping prevent the fiscal cliff? Why is there no discussion about that.
  • Mike Stennett commented on 11/20/2012
    We need to focus on all the non essential spending and wasteful spending that the government now has. We also need to cut out abuses by people getting freebies that they are not in need of. We need to limit earned income credits because people are having children just to draw more benefits. Aid to other countries should stop all together. Borrowing money to give to other countries does not make since. If we have a surplus then it would be fine but we are a long ways from that. We as americans have to live within our budgets and the government needs to lead by example and quit spending more money than they have. I also feel that government employees should live under the same guidelines for social security and other benefits just like your everyday american citizens do. I feel it is an abuse of power to give yourself something better than you expect from the people that are actaully funding the whole show. We need to get responsible spending habits and we need it NOW.
  • John Williams commented on 11/20/2012
    The term "Fiscal Cliff" was not "coined" by Ben Bernanke. An NY Times reporter used the term on Oct. 20, 1957, in an article about the danger of deciding to buy a home because tax rates are low. The trerm has been used many times over the years about various impending finacial doom (NYC's near bankrupcy in the '70's for example) and in 2008 Senator Jim DeMint said: "We are trillions of dollars in debt and Obama's massive new spending program threatens to send our nation over a fiscal cliff, leading to higher taxes and fewer jobs." Bernanke wasn't even the first to use it about our currenct problems, two weeks before Bernanke used the phrase, a Reuters article was titled: "Geithner: year-end fiscal cliff to hit U.S. growth".
  • Timothy Hubert commented on 11/20/2012
    Give no ground to the Obama administration whatsoever !! I agree with you for the most part on this topic posted here. I want Congress to DEMAND a balanced budget from this White House Occupier----PERIOD!! Do not raise taxes but extend all Bush Era tax cuts until the new Congress takes the throne after Jan.1, 2013, then let them do battle with the knuckleheads in the WH & Senate. Last of all, CUT ALL ENTITLEMENT PROGRAMS starting with the fraud-waste-abuse of the EBT entitlement program. Make mandatory DRUG SCREENING a requirement of ALL EBT/MEDICAID Card holders every 45 days or less,,that'll be a great job stimulus to the lab people for sure.
  • Michael Barwick commented on 11/20/2012
    Regardless of your party affiliation the country is in serious financial trouble. When my personal financial situation changes to threaten my lively hood I make cuts to my spending secure my revenue generating capabilities and review my current capital levels. I like most Americans can't understand why the US government can't make these same assessments. It is time for congress to have the same benefits as the everyday American then they would make the correct choices. Limited terms for congress would be the very beginning to bring you all back to reality. Unfortunately we are all in for a very uncomfortable ride to the bottom the likes we haven't seen since the 30's and 40's. The difference now is men and women had a sense of pride and were willing to work in the 30's and 40's for their very unwanted but needed government assistance now we expect it without the first drop of sweat. Not only do we expect the very basics like food and water we expect cell phones, living arrangements, health care, government credit cards that won't embarrass us in the grocery line, and respect from individuals that don't live off of the government. The FREE RIDE WILL END it is just a matter of how hard it crashes.
  • J D commented on 11/20/2012
    Rep. Forbes, this is an excellent resource. I've forwarded it to many of my friends and family who don't live in our district, because there is so much confusion about what is involved in this upcoming event. The mere fact that some 200,000 members of our military would be left jobless because of the fiscal cliff should be enough to motivate our leaders to do everything in their power to avoid it. However, I fear that it will take a severe jolt for the American people to finally wake up to the fact that we are out of money. It's just that simple. We have spent and spent on programs that just don't make any sense, and now we are being presented with the bill. I hope that out of our impending misery, we finally gain a renewed appreciation for self-reliance and entrepreneurship.
  • Tom DeSanto commented on 11/20/2012
    Whether it's "increase revenues through tax reform" or "through tax rate increases"the money has to come from somewhere, so stop the double talk. Do nothing, let the (BCA) sequestration take effect, the taxes "reset" not increased, and get on with paying the bills. Stop kicking the can down the road. Come on get real, even the the proposed $2 trillion deficit reduction over 9 years, still leaves us adding $7-8 trillion to the national debt! And somehow you think this is an acceptable solution. Here's an idea. Reset all taxes and spending to Clinton era levels. Oh, and how about ending the unfunded wars.
  • David Thelen commented on 11/24/2012
    I believe we must create an environment for a stronger housing market. This lead the way to full employment in the 1990s. We had balanced budgets in the late 1990s as a result. What changes can there be to create a stronger housing market? According to econ 101, whenever you lower the price of something, you will sell more of that something. Thus your total net profits will rise. However, if you lower that price too much, your total net profits will begin to decline. These profits act like a downward slopping curve. The Calculus of a math formula will dictate what price to set to obtain maximum profits. The mortgage rates and the down payment fees are currently at an all time low. You will notice the housing market is turning around the corner with higher prices and more homes sold. Exactly what econ 101 says it would? Plus, some Americans are realizing much lower mortgage payments after refinancing their homes. Thus people have extra cash to spend on the economy after paying these low mortgage payments. Should leaders allow "underwater" homes to be refinanced with these loans, as well? Currently, to sell your home it costs are 6-7 percent of the price of your home. Can they lower this price so it will sell more homes for the same amount of time? With today's digital technologies, they no longer need to print expensive pamphlets. Can new tax credits be given to reduce this price to sell a home to let's say 3-4 percent, instead? Then this would help stimulate the housing market and the overall Iowa economy as well. Create new tax credits for those who make their homes more energy efficient (better windows, furnaces, insulation?) It would lower everyone's energy bills. Then more cash would be made available to spend after these lower monthly energy bills. Not to mention it would create new construction jobs improving homes. Encourage residential property tax cuts to stimulate the economy. It must be passed onto its renters, as well. Then this extra cash could be spent to help stimulate the US economy even more. In addition according to econ 101 above, for every one-dollar in residential tax cuts in the short run, will create higher residential property values in the long run. These higher values will translate into higher tax revenues, for both states and for schools. Education is the key to reduce the dependency on entitlements. College costs were a lot lower in the 1990s than compared to today. Today, graduates have record high student loans debt. This decreases the ability to buy new homes and cars after graduating. Thus, harms our economy to achieve full employment like that of the 1990s. Please give tax breaks for excessive tuition. "Who's going to pay for these ideas?" For every one-dollar spent on these programs, will result in multiple amount of both tax revenues increase and entitlement decrease in the long run. ...The Bush's tax cuts are not working. We should create a middle class tax cuts mentioned above, instead.
  • Robert Eure commented on 11/29/2012
    Rep. Tom Cole (R) of Oklahoma has suggested to extend just the tax-rate cuts for those making $250,000 or less before the end of the year. The economy needs optimism to speed recovery. The sooner this can be accomplished, the sooner the American public can begin to become optimistic about our economic future.
  • george mungin commented on 12/4/2012
    STOP WORSHIPPNG NORQUEST AND VOTE FOR A TAX INCREASE ON THE 250.000 AND ABOVE LIKE YOURSELF, IF YOU WANT TO HELP THE POOR AND MIDDLE CLASS
  • Sharon Leary commented on 12/26/2012
    I don't mind paying a fair share, but what I mind is paying for those who have a sence of 'entitledment.' When did the government become responsible for paying for everything. The Federal government is responsible for providing for the "common defense" not providing everyone everything. Based on what you posted, my family will be paying over 33% tax. How is that fair. We save and contribute to a retirment fund because I was raised knowing that Social Security was designed to keep me out of the poor house, NOT to be my SOLE retirement fund. Yet, any capital gains I make on my limited mutual fund investment is taxed. Less than 50% of the US citizens even PAY federal tax, how is that fair? I don't care how much you earn, you should have to contribute. Until we STOP this sence of entitlement, the government is going to break this Nation because of spending. When I"m cutting coupons and looking for sales, driving a 6 year old car, yet Congress keeps handing out more and more services, creating multiple generations that look first to the government to solve the personnal problems instead of taking responsibility. Take a good hard look at what Congress is spending on SS, Welfare, make the companies we bailed out pay back what was given.
  • Frederick Bravo commented on 1/18/2013
    This is about as clear and easy to understand as it can be. The article below is completely neutral, neither anti-republican or democrat. Charlie Reese, a retired reporter for the Orlando Sentinel, has hit the nail directly on the head, defining clearly who it is that in the final analysis must assume responsibility for the judgments made that impact each one of us every day. It's a short but good read. Worth the time. Worth remembering! 545 vs. 300,000,000 People -By Charlie Reese Politicians are the only people in the world who create problems and then campaign against them. Have you ever wondered, if both the Democrats and the Republicans are against deficits, WHY do we have deficits? Have you ever wondered, if all the politicians are against inflation and high taxes, WHY do we have inflation and high taxes? You and I don't propose a federal budget. The President does. You and I don't have the Constitutional authority to vote on appropriations. The House of Representatives does. You and I don't write the tax code, Congress does. You and I don't set fiscal policy, Congress does. You and I don't control monetary policy, the Federal Reserve Bank does. One hundred senators, 435 congressmen, one President, and nine Supreme Court justices equates to 545 human beings out of the 300 million are directly, legally, morally, and individually responsible for the domestic problems that plague this country. I excluded the members of the Federal Reserve Board because that problem was created by the Congress. In 1913, Congress delegated its Constitutional duty to provide a sound currency to a federally chartered, but private, central bank. I excluded all the special interests and lobbyists for a sound reason. They have no legal authority. They have no ability to coerce a senator, a congressman, or a President to do one cotton-picking thing. I don't care if they offer a politician $1 million dollars in cash. The politician has the power to accept or reject it. No matter what the lobbyist promises, it is the legislator's responsibility to determine how he votes. Those 545 human beings spend much of their energy convincing you that what they did is not their fault. They cooperate in this common con regardless of party. What separates a politician from a normal human being is an excessive amount of gall. No normal human being would have the gall of a Speaker, who stood up and criticized the President for creating deficits.. ( The President can only propose a budget. He cannot force the Congress to accept it.) The Constitution, which is the supreme law of the land, gives sole responsibility to the House of Representatives for originating and approving appropriations and taxes. Who is the speaker of the House?( John Boehner. He is the leader of the majority party. He and fellow House members, not the President, can approve any budget they want. ) If the President vetoes it, they can pass it over his veto if they agree to. [The House has passed a budget but the Senate has not approved a budget in over three years. The President's proposed budgets have gotten almost unanimous rejections in the Senate in that time. ] It seems inconceivable to me that a nation of 300 million cannot replace 545 people who stand convicted -- by present facts -- of incompetence and irresponsibility. I can't think of a single domestic problem that is not traceable directly to those 545 people. When you fully grasp the plain truth that 545 people exercise the power of the federal government, then it must follow that what exists is what they want to exist. If the tax code is unfair, it's because they want it unfair. If the budget is in the red, it's because they want it in the red. If the Army & Marines are in Iraq and Afghanistan it's because they want them in Iraq and Afghanistan .. If they do not receive social security but are on an elite retirement plan not available to the people, it's because they want it that way. There are no insoluble government problems. Do not let these 545 people shift the blame to bureaucrats, whom they hire and whose jobs they can abolish; to lobbyists, whose gifts and advice they can reject; to regulators, to whom they give the power to regulate and from whom they can take this power. Above all, do not let them con you into the belief that there exists disembodied mystical forces like "the economy," "inflation," or "politics" that prevent them from doing what they take an oath to do. Those 545 people, and they alone, are responsible. They, and they alone, have the power. They, and they alone, should be held accountable by the people who are their bosses. Provided the voters have the gumption to manage their own employees... We should vote all of them out of office and clean up their mess! Charlie Reese is a former columnist of the Orlando Sentinel Newspaper. What you do with this article now that you have read it... is up to you. This might be funny if it weren't so true. Be sure to read all the way to the end: Tax his land, Tax his bed, Tax the table, At which he's fed. Tax his tractor, Tax his mule, Teach him taxes Are the rule. Tax his work, Tax his pay, He works for peanuts anyway! Tax his cow, Tax his goat, Tax his pants, Tax his coat. Tax his ties, Tax his shirt, Tax his work, Tax his dirt. Tax his tobacco, Tax his drink, Tax him if he Tries to think. Tax his cigars, Tax his beers, If he cries Tax his tears. Tax his car, Tax his gas, Find other ways To tax his ass. Tax all he has Then let him know That you won't be done Till he has no dough. When he screams and hollers; Then tax him some more, Tax him till He's good and sore. Then tax his coffin, Tax his grave, Tax the sod in Which he's laid... Put these words Upon his tomb, 'Taxes drove me to my doom...' When he's gone, Do not relax, Its time to apply The inheritance tax. Accounts Receivable Tax Building Permit Tax CDL license Tax Cigarette Tax Corporate Income Tax Dog License Tax Excise Taxes Federal Income Tax Federal Unemployment Tax (FUTA) Fishing License Tax Food License Tax Fuel Permit Tax Gasoline Tax (currently 44.75 cents per gallon) Gross Receipts Tax Hunting License Tax Inheritance Tax Inventory Tax IRS Interest Charges IRS Penalties (tax on top of tax) Liquor Tax Luxury Taxes Marriage License Tax Medicare Tax Personal Property Tax Property Tax Real Estate Tax Service Charge Tax Social Security Tax Road Usage Tax Recreational Vehicle Tax Sales Tax School Tax State Income Tax State Unemployment Tax (SUTA) Telephone Federal Excise Tax Telephone Federal Universal Service Fee Tax Telephone Federal, State and Local Surcharge Taxes Telephone Minimum Usage Surcharge Tax Telephone Recurring and Nonrecurring Charges Tax Telephone State and Local Tax Telephone Usage Charge Tax Utility Taxes Vehicle License Registration Tax Vehicle Sales Tax Watercraft Registration Tax Well Permit Tax Workers Compensation Tax STILL THINK THIS IS FUNNY? Not one of these taxes existed 100 years ago, & our nation was the most prosperous in the world. We had absolutely no national debt, had the largest middle class in the world, and Mom stayed home to raise the kids. Charley Reese's final column for the Orlando Sentinel... He has been a journalist for 49 years. He is retiring and this is HIS LAST COLUMN.
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