Facts on the US fiscal cliff – ABC News Australian Broadcasting Corporation

d debt.What is it?The Budget Control Act of 2011, set into law in a grudging political compromise in August that year, forces the government to slash spending by $1.2 trillion over 10 years from January 1, 2013. Next year’s cuts, called “sequestration”, would be about $109 billion.Also on that date, a package of tax reductions set or extended in 2010 to spur economic growth, as well as an extension of unemployment benefits, will expire, meaning taxes will rise significantly for most Americans.Why will this happen?Democrats and Republicans have long been deadlocked over whether to address a $1 trillion-plus annual budget gap with higher taxes or lower spending.The BCA was a poison-pill deal designed to force them to find a less austere compromise, but neither side would budge before the November 6 election.Now that the vote has passed, they only have a few weeks to find a solution to beat the year-end deadline.

via Facts on the US fiscal cliff – ABC News Australian Broadcasting Corporation.

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