A common phrase in the media at the present time is the fiscal cliff. It refers to a set of tax increases, new taxes and federal budget cuts that in combination threaten to tip an already soft economy into recession.
On tap are five new taxes due to the Affordable Health Care Act (aka Obamacare, a possible increase to the estate tax, income tax increases for all taxpayers, a short-term fix on the Alternative Minimum Tax and expiration of the 2 percent payroll tax holiday.
On top of these issues, the federal government is spending money like a drunken sailor. (Apologies if I’ve offended any drunks or sailors by associating them with a fiscally incontinent federal government!) How bad is it? Federal borrowing averages $2.7 BILLION a day meaning a new debt ceiling crisis will come up in early 2013.
The best primer I’ve seen explaining all of this has been produced by the Tax Foundation. You can find it here.