It is explained that the "fiscal cliff" itself refers to the end of Bush-era tax cuts and large spending cuts that will occur at the end of the year if Congress can't agree on a way to cut $1.2 trillion in debt over the next decade. This would lead to income tax and payroll tax increases for almost everyone, with an immediate negative impact on spending and thus on the economy, and with a rising unemployment rate through 2013. The article also cites Ben Bernanke as saying the Fed would not be able to counter or even effectively mitigate the effects of going over this cliff, yet the politics will have to play out before any action is taken by anyone.
Illuminating the issue still further, John D. McKinnon, Kristina Peterson, and Josh Mitchell's "Most Households Face 'Fiscal Cliff'" from the November 21st edition of the Wall Street Journal present personal stories that typify the impact the fiscal cliff would have for people on various rungs of the socioeconomic ladder. Describing the various tax increases and other effects of the fiscal cliff in general terms first, this article then gives an example of an individual that meets the general description for every basic income/economic...
A human face is put on the numbers and the rhetoric that have been occupying many headlines and stories in the news over the past months, making the subject more accessible.
The same edition contained another story by Jon Hilsenrath, "Fed Still Trying to Push Down Rates," which details Bernanke's pledge to try to keep interest rates low through 2013 to stimulate the economy. Background information on ongoing unemployment and the dangers of the fiscal cliff are given, and also provides some history of central banks responding to legislative efforts in a spirit of cooperation but not coercion. The article also cites Bernanke's repeated warnings regarding the fiscal cliff and other fiscal policies that portend danger to the U.S. economy (and to the world economy at large), and the need to move beyond partisan politics to arrive at real and lasting solutions for the economy.
These articles demonstrate the ongoing problems faced in the current U.S. economy and contended with by agencies such as the Fed and large government bodies such as Congress. The individual personalities involved also appear to be of importance, and possibly of great hindrance.
