Bloomberg Visual Data

Fiscal Cliff: What's at Stake?

Revenues vs. Spending

The U.S. has run budget deficits in every year since 2001, owing to a combination of economic slowdowns, tax cuts and spending increases.

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Data: Congressional Budget Office

Surplus vs. Deficit

Between 1998 and 2001, the U.S. ran a surplus (that is, revenues were largers than expenditures). All other years since 1996, the U.S. has run a deficit. During the financial crisis and the recession of 2008 and 2009, spending climbed in government safety-net programs and the stimulus law while tax revenue dropped.

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Data: Congressional Budget Office

Deficit as a percentage of GDP

The deficit increased in 2009, running as high as 10% of GDP. Allowing the deficit to remain at this level could eventually have effects on the U.S. economy.

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Data: Congressional Budget Office

Fiscal Cliff

The U.S. fiscal cliff is the net collection of more than $600 billion in automatic tax increases and spending cuts scheduled to take effect at the beginning of 2013.

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Note: Does not include additional interest required for increased borrowing or the compounding effect of adjusting AMT for inflation and extending other taxes set to expire. Data: Congressional Budget Office

Budget Cuts

The agreement that President Obama and congressional Republicans reached in 2011 to increase the debt limit included $1.2 trillion in automatic spending cuts to take effect over the next decade. The cuts, known as sequestration, were designed to force Congress to act to avert them. However, Congress has yet to agree on a deal to prevent automatic spending cuts.

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Data: Congressional Budget Office

Tax increases

The income tax cuts enacted in 2001 and 2003 under President George W. Bush are scheduled to lapse at the end of the year. If Congress doesn't act, taxes would rise for ordinary income, capital gains, dividends and estates. Also, other tax breaks have lapsed for tax year 2012, including a provision that prevents 27 million households from having to pay the alternative minimum tax (AMT).

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Data: Congressional Budget Office

Consequences of the Fiscal Cliff

The tax increases, including the expiration of the payroll tax cut, may effect consumer demand. The spending cuts would impact companies such as defense contractors that depend on government work. The deficit reduction of these policies total more than 2% of GDP. Economic forecasts by the CBO project that a reduction of this size would cause the U.S. economy to go into recession and unemployment to rise to 9.1% in 2013.

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Data: Congressional Budget Office