The newest idiom in the American political lexicon is the "fiscal cliff.” It is all but certain to become a catch-phrase for the next fiscal iceberg facing the supertanker known as the U.S. economy. The fiscal cliff refers to approximately $1.2 trillion in automatic spending cuts coupled with expiration of the Bush-era tax cuts and a payroll tax break. Absent an agreement between Congress and the Obama Administration to reduce deficits to a certain, pre-determined targets and a compromise on the expiring tax cuts, the U.S. economy will cross the tip of the cliff on January 1, 2013.

The consensus opinion, in what is fast becoming conventional wisdom is that inaction will have a devastating impact on the U.S. economy. According to the nonpartisan Congressional Budget Office, the economic uncertainties generated from the failure to extend the tax cuts and block the spending curbs would increase the unemployment rate to 8.9% by year-end and 9.2% at the end of 2013. Additionally, the U.S. economy would grow by just 1.1% in the federal fiscal year that starts this coming October 1.

In the last few weeks, a chorus of voices has emerged advocating a fix. Any fix. Many have called on Congress and the President to enact at the very least, a stopgap measure to avoid the "crisis". The advocates include Federal Reserve Chairman, Ben Bernanke, The Business Roundtable, National Federal of Independent Business, and hordes of corporate CEOs and private economists.

Inaction would cancel tax cuts enacted in 2001, 2003 and 2010, and bring back 1990s estate tax exemptions and rates and expand the reach of Alternative Minimum Tax. Additionally, the payroll tax cuts enacted in 2011 and 2012 would be ended.

This week, the Congress is slated to start debating the extension of hundreds of billions of dollars in expiring tax cuts, but with Democrats in charge of the Senate and Republicans leading the House of Representatives, the outcomes will be very different and will be used for political posturing as a lead up to this November's gargantuan elections.

At this point, with politics taking over the political calendar, the best case scenario is for the "lame duck" session of Congress to meet right after the election to enact a stop-gap measure before the end of the year.

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Founded in 1953, Green Hasson Janks is a Los Angeles-based accounting firm that specializes in nonprofit, food and beverage, entertainment and media and health and wellness companies. Recipient of the Los Angeles Chamber of Commerce 2018 Employee Champion For Life Work Harmony Award and named a…Learn More