On Friday the celebratory parties were cut short by one killer of a hangover. That's when most of the country (50.6 percent to be precise) woke up to learn about the "fiscal cliff" the country is facing. This did not come as a shock to most Romney supporters, but after Tuesday's drubbing, not much would.
As a brief review, "fiscal cliff" is the term used to describe the expiration of the Bush-era tax cuts, automatic federal spending cuts, and a significant reduction of the federal deficit that is set to go into effect at the end of 2012. In other words, taxes will increase, federal spending will decrease, and there will be a sudden reduction to the deficit.
One may ask: what does this mean for the country? According to the Congressional Budget Office, the net effect of the fiscal cliff is a short-term recession. Unfortunately, the long-term effect is not certain. On paper, the recession would be short lived and America would soon be in a better fiscal situation with a greatly reduced federal deficit and lowered federal spending. However, since economics is comprised not only of financial models but also human behavior, it is equally as likely that the short-term recession could turn into something far worse, such as a long recession or even a depression.
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