Fiscal Cliff And Its Consequences Sample Essay
In the United States, the term fiscal cliff has found a significant use in the past few years. According to Sahadi, there have been many occurrences within the country’s financial bench; all with varied significance and scope, but culminating to the financial cliff. Although the term has found its application in different financial scenarios, the climax is the sharp decline in the budget deficit postulated to occur at the beginning of the year 2013. As such, this paper highlights some of the significant financial issues in the United States that input varied scopes to the fiscal cliff.
Undoubtedly, various institutions come into play in the fiscal cliff issue. The congressional Budget Office (CBO) is arguably the chief institution in this agenda. This is mainly because of the role that this institution has played since the founding of the term in the year 2010. The Congressional Budget Office has been instrumental in predicting, estimating and affirming the economic trend over the period that the term has been in use. The CBO made various analyses in policy options mainly by focusing on their economic and employment effects. As such, the CBO as an institution had a key role in the fiscal cliff matter.
Another important aspect observable with the fiscal cliff issue is the contribution of some key laws. Indeed, various acts are evident within the scope of the financial cliff. For example, the 2010 Tax Relief Act, the Budget Control Act of 2011, and the American Taxpayer Relief Act of 2012 have varied contribution to the fiscal cliff. Apparently, many people claim that the Bush tax cuts gave rise to the fiscal cliff term. This is mainly because of their founding principles and the fact that other acts followed to support them. Each of these acts contributed to the events that saw the decline in the budget deficit in 2013. On the other hand, the Budget Control Act of 2011 led to “sequestration”; a term that represents the across-the-board spending cuts. Expiration of the 2% social payroll tax cut, expiration of measures delaying the effecting of Medicare Sustainable Growth Rate, and that of the federal unemployment benefits; as protracted by the Middle Class Tax Relief and Job Creation Act of 2012 (MCTRJCA), had immense contribution to the fiscal cliff.
In conclusion, the physical cliff is a significant issue in the United States financial world. It is evident that the term encapsulates various concepts and dynamic fiscal, social and economic agendas to warrant for its study. Therefore, any endeavor focusing on the issue should consider the various concepts.