Fiscal cliff deal

In the United States, the “fiscal cliff” refers to the economic effects that will result from tax increases, spending cuts, and a corresponding reduction in the US budget deficit, potentially beginning in 2013. The deficit—the difference between what the government takes in and what it spends—is projected to be reduced by roughly half in 2013. The Congressional Budget Office estimates that this sharp decrease in the deficit (the fiscal cliff) will likely lead to a mild recession in early 2013 with the unemployment rate rising to roughly 9 percent in the second half of the year.