Robert Siegel and Melissa Block examine what makes up the so-called "fiscal cliff."
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MELISSA BLOCK, HOST:
Speaking of the fiscal cliff, let's take a minute to review what it is and how it all began. Imagine yourself standing on top of a cliff and it's December 31st, New Year's Eve and you're looking down, way down, toward New Year's Day. That's the deadline, the day a lot of fiscal policy will change and nearly all of us will feel it unless Congress acts.
ROBERT SIEGEL, HOST:
Congress, along with the White House, set that deadline to resolve the long nasty fight over budget deficits and the debt ceiling back in the summer of 2011. Our political leaders thought it would be a good idea to increase the stakes of failing to find ways to reduce the deficit to create an incentive for compromise. So they established automatic cuts and tax hikes that would take effect on January 1st, 2013, the fiscal cliff.
BLOCK: But no compromise has yet emerged, so here we are in November headed toward that fiscal cliff. If Congress does not act before the end of the year there will be across the board cuts in spending to everything but entitlements. That means education, defense, food stamps, national parks, you name it. And there's the other side of the package, the Bush era tax cuts expire, so taxes will go up.
SIEGEL: And the cliff gets even higher when you add in the fact that some stimulus measures are expiring January 1st, including the payroll tax holiday and extended unemployment benefits. So both consumers and the government are going to have a lot less to spend if we go over that cliff and that could push the economy back into recession.
BLOCK: Here's a request for you. While our leaders work on backing us away from the fiscal cliff, you might get tired of hearing that phrase over and over. Do you have a new metaphor for us? We're open to suggestions. Please send them to us at NPR.org. As always, scroll to the bottom of the page and click Contact Us. And please put: Let's Get Fiscal in the subject line. Transcript provided by NPR, Copyright NPR.