Countdown to the Fiscal Cliff: The Cost of Inaction

The Fiscal Cliff is a $600 billion combination of tax increases and across-the-board spending cuts, schedule to go into effect on January 2, 2013. To put this in perspective, $600 billion is twice the size of growth in U.S. GDP this year. With $440 billion in tax increases and $108 billion in harmful spending cuts, it should come as no surprise that going over this cliff will likely result in a recession. In fact the American Action Forum estimates that failure to avert the fiscal cliff could result in a loss of as many as 10 million jobs, a 6 percentage point drop in GDP, a 2 percentage point increase in unemployment, and 2.8 million more people unemployed. The fiscal cliff threatens businesses already struggling with a complicated and burdensome tax code and regulatory regime, not to mention the massive blow these spending cuts would take to our national defense. The fiscal cliff is a threat to our nation’s security and our economy and it must be addressed.

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