How about I let Mr Burns
explain…
And that is all you need to know!
…
But if you need some more detail,
let’s take a step back. Fiscal policy is the government’s method of demining
the tax level and it’s allocation of how to spend that money. From
dictionary.com, a cliff is: a high steep face of a rock. The US economy is in a lot of debt. Each year they
spend approximately $US 3.6 trillion, and makes $US 2.3 trillion, leaving a
deficit of $US 1.3 trillion and constitutional obligation to reduce the debt levels.
Essentially if
the Democrats and the Republicans cannot agree on a Fiscal policy that cuts the
level of spending, a lot of tax hikes and budget cuts will come into effect at
midnight, January 1st, 2013. The origin of the preverbal ‘cliff’
comes from the worry that if all of these changes to fiscal policy occur at once it
could launch the US economy into another recession, along with the rest of the
world. So it all comes down to whether opposing politicians can make
concessions and come to an agreement; Republicans wanting to slash spending but
avoid raising taxes, where Democrats are looking for more of a compromise
between the two.
My advice? … Never
trust politicians, be ready for the fiscal cliff!
