How will policymakers do in dealing with the sequester? Use this report card to grade their performance.

Learn more about the fiscal cliff deal with this concise summary and cost breakdown.

CRFB’s analysis examines the fiscal changes set to take effect at the end of the year and argues that policymakers should replace the cliff with smart and gradual deficit reduction measures to prevent a mountain of debt in the future.

The immediate and blunt nature of deficit reduction under the fiscal cliff would have a devastating impact on the economy, but we also cannot avoid addressing our medium- and long-term debt problem. Kicking the can down the road yet again would be a clear signal to markets and the public that we are not serious about putting our debt on a sustainable, downward path as a share of the economy.

To this end, CRFB released a report on what we hope to see from the ongoing negotiations. In the report, we urge lawmakers to:

  • Agree to a framework for a fiscal plan with sizeable savings;
  • Put in place a credible process to achieve the framework;
  • Address the fiscal cliff; and
  • Enact a downpayment.
 

The Fiscal Cliff Resource Page

The Sequester

There's been lots of talk about the "sequester" recently from businesses, financial markets, credit rating agencies, elected leaders, federal employees, economists, and concerned citizens -- so CRFB has compiled a list of resources for information about it.

The sequester, or sequestration, refers to the across-the-board spending cuts that were a part of the "fiscal cliff." The sequester was delayed for two months by the fiscal cliff deal at the beginning of the year and is now scheduled to take effect March 1. The cuts for 2013 will be $85.3 billion, split evenly between defense and domestic spending.

The sequester has been referred to as an ax where a scalpel is needed because the cuts will be abrupt and mindless. Agencies will have little flexibility as to where the cuts are made. Many want to replace it with a more thoughtful and comprehensive approach that is phased in over time and deals with all parts of the budget.

Learn more about sequestration here and below.

Fiscal Cliff Refresher

The fiscal cliff describes the major budget changes that were originally set to occur all at once at the end of 2012 and beginning of 2013. These changes include the expiration of the 2001/2003/2010 tax cuts, the triggering of across-the-board spending cuts through the "sequester," the expiration of the payroll tax holiday, the end of the "patch" protecting many middle-class families from the Alternative Minimum Tax, and the end of the "doc fix" preventing steep reductions in Medicare payments to physicians. As Ben Bernanke remarked at the end of February 2012:

Under current law, on January 1, 2013, there's going to be a massive fiscal cliff of large spending cuts and tax increases. I hope that Congress will look at that and figure out ways to achieve the same long-run fiscal improvement without having it all happen at one date.

 

 

While these changes would produce significant deficit reduction, they would do so in an abrupt and careless manner that would likely plunge the economy back into recession. While this is certainly something to be avoided, an even worse option would be extend all of the policies with no corresponding offsets, leading to a mountain of debt and all of the associated economic risks. The fiscal cliff provides an opportunity to enact a comprehensive fiscal plan, one that puts the debt on a clear downward path as a share of the economy in a smart way.

See a summary and breakdown of the fiscal cliff deal approved by Congress


 

Sequester Blogs

 

Other Sequester Resources

 

Fiscal Cliff Policy Papers

 

Fiscal Cliff CRFB Blogs

 

 

Busting Fiscal Cliff Myths

 

Fiscal Cliff Videos

 

Fiscal Cliff Infographics

 

Fiscal Cliff Interactive

 

Fiscal Cliff Social Media

 

CRFB Press Releases

 

Op-Eds and Articles and Other Useful Links