Not a Cliff, An Obstacle Course Allan Paquette/ flickr
With all the talk about the "fiscal cliff," it seems that one important thing has been left out: A simple definition of what is the fiscal cliff.
"Fiscal cliff" refers to a host of different federal budget cuts and tax increases that are all scheduled to take effect at the start of 2013. These looming budget cuts and tax increases are referred to as a "cliff" because, if they all actually took effect in 2013, it would be a major setback for our weak economy.
But here's the good news: It's very unlikely that all of these cuts and tax hikes actually happen. In fact, many people (including yours truly) argue that "fiscal cliff" is a misnomer, since it suggests that we have only two options – we either go over the cliff, or we don't. But that's not true. There are more than a half dozen different policy changes currently scheduled for 2013, and their combined effect would indeed be bad for the economy, but letting some of the scheduled changes take effect is probably a good idea. For that reason some people are calling this not a cliff but a "fiscal obstacle course," a term that was pioneered by our friends at the Economic Policy Institute.
If you want some more detail about what exactly are these looming tax increases and budget cuts, we've got just the thing for you. In this piece, my colleague Chris Hellman and I explain all the stops on the fiscal obstacle course and why we're facing this obstacle course in the first place. And we make some predictions: Some of these changes are likely to take effect, and some will probably never happen, and there may not be much sense in how it all gets decided. Check out our prediction.
UPDATE January 2013: Click here for an explanation of the fiscal cliff deal that lawmakers passed in order to avoid the fiscal cliff.