{
  "id": "R42700",
  "type": "CRS Report",
  "typeId": "REPORTS",
  "number": "R42700",
  "active": true,
  "source": "EveryCRSReport.com, University of North Texas Libraries Government Documents Department",
  "versions": [
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      "source": "EveryCRSReport.com",
      "id": 416190,
      "date": "2013-01-09",
      "retrieved": "2016-04-06T21:30:21.648864",
      "title": "The \u201cFiscal Cliff\u201d: Macroeconomic Consequences of Tax Increases and Spending Cuts",
      "summary": "A major policy concern for Congress has been when and whether to address the \u201cfiscal cliff,\u201d a set of tax increases and spending cuts that would have substantially reduced the deficit in 2013. In projections made in March 2012 by the Congressional Budget Office (CBO), this fiscal restraint, constituting 5.1% of output in 2013, would have reduced growth to 0.5% from 4.4%. Unemployment would increase by 2 million. In August, updated estimates projected growth at a negative 0.5%. The American Taxpayer Relief Act (H.R. 8) eliminated part of the fiscal cliff.\nPolicy choices with respect to the fiscal cliff are difficult because of the conflict between short-run and long-run economic and budgetary objectives. In the short run, the reduction in demand from the reduced budget deficits could damage an already fragile recovery. In the longer run, however, deficit reduction is needed to address a projected unsustainable debt level.\nFor FY2013, compared with FY2012, the original policy-related fiscal cliff was projected at $502 billion, 80% reflecting tax increases, with an additional $105 billion from other changes. The expiration of the 2001, 2003, and 2009 tax cuts (extended in 2010) and the expiration of the alternative minimum tax (AMT) \u201cpatch,\u201d which indexes the AMT exemption for inflation, accounted for 44% of the policy-related fiscal cliff. Other tax provisions included expiration of the temporary two percentage-point reduction in the employee\u2019s Social Security payroll tax (19%); the expiration of other tax cuts, including depreciation and the \u201cextenders\u201d (13%); and taxes scheduled to come into effect as a part of health reform (4%). Spending reductions included the automatic spending cuts under the Budget Control Act (13%); the expiration of extended unemployment insurance benefits (5%); and the \u201cdoc fix\u201d that would have lowered Medicare payments (2%). Most changes would have taken effect after 2012, although the AMT and many of the extenders expired after 2011.\nCBO estimates were similar to those of other forecasters. Estimates are uncertain; CBO suggested a range of potential reductions in growth from 0.9% to 6.8% if the fiscal cliff occurred. Thus, the effects could have been much smaller, but they could also have been significantly larger, than CBO\u2019s mid-point estimate. Different parts of the cliff were projected to have different effects per dollar of budgetary effects, with larger effects from the automatic budget cuts and ending extended unemployment benefits than from ending tax cuts for higher-income individuals. \nH.R. 8 passed by the House on January 1, 2013 (after previous Senate approval) eliminated two-thirds of the policy-related fiscal cliff, and slightly over half of the total (including non-policy-related provisions). Thus about half of the contractionary effect remains, which would appear to reduce output by about 2%. H.R. 8 permanently extended the 2001 and 2003 income tax cuts, except for high-income taxpayers and the $5 million exemption for the estate taxes (but with a higher rate). It extended the 2009 cuts through 2017. It extended unemployment insurance benefits, the doc fix, and bonus depreciation and the \u201cextenders\u201d through 2013. It delayed the automatic spending cuts for two months. Elements of the fiscal cliff that will continue to reduce the deficit in 2013 compared with 2012, and potentially exert a contractionary effect, are the payroll tax reduction, which expired; some individual income tax cuts for high-income individuals; tax increases enacted in health reform; the remaining budget cuts; and non-policy-related effects.",
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      "typeId": "REPORTS",
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    },
    {
      "source": "University of North Texas Libraries Government Documents Department",
      "sourceLink": "https://digital.library.unt.edu/ark:/67531/metadc817694/",
      "id": "R42700_2012Sep20",
      "date": "2012-09-20",
      "retrieved": "2016-03-19T13:57:26",
      "title": "The \u201cFiscal Cliff\u201d: Macroeconomic Consequences of Tax Increases and Spending Cuts",
      "summary": null,
      "type": "CRS Report",
      "typeId": "REPORT",
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      "topics": []
    },
    {
      "source": "University of North Texas Libraries Government Documents Department",
      "sourceLink": "https://digital.library.unt.edu/ark:/67531/metadc227799/",
      "id": "R42700_2012Sep05",
      "date": "2012-09-05",
      "retrieved": "2013-11-05T18:07:05",
      "title": "The \"Fiscal Cliff\": Macroeconomic Consequences of Tax Increases and Spending Cuts",
      "summary": "Report regarding the fiscal cliff, which is a set of tax increases and spending cuts that would substantially reduce the deficit in 2013.",
      "type": "CRS Report",
      "typeId": "REPORT",
      "active": false,
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      "topics": [
        {
          "source": "LIV",
          "id": "Budgets",
          "name": "Budgets"
        },
        {
          "source": "LIV",
          "id": "Federal budgets",
          "name": "Federal budgets"
        },
        {
          "source": "LIV",
          "id": "Fiscal policy",
          "name": "Fiscal policy"
        },
        {
          "source": "LIV",
          "id": "Economic policy",
          "name": "Economic policy"
        }
      ]
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  ],
  "topics": [
    "Economic Policy"
  ]
}