The Fiscal Cliff is Coming and it Doesn’t Exist

You may have heard recent talk about the “Fiscal Cliff”, and if you haven’t then trust me you will over the next few weeks. For those of you confused about what the fiscal cliff is don’t worry; everyone is confused by it and I'm about to tell you some things that might make it a bit less scary.  Essentially, over the next few months a lot of temporary laws in the United States are going to expire. These are laws which were brought in saying that taxes would be reduced for certain people for a number of years, or that certain government programmes would be guaranteed funding for a certain number of years. As the time limit on these all finish at roughly the same time that means that quite suddenly government spending will go down and taxes will rise. This has made people worry that the recession will start up again as suddenly a lot of money will be taken out of the economy. Trying to fix this is an even bigger problem as Republicans who control the House of Representatives want to cut spending and keep the tax cuts, whereas Democrats who control the Senate and the Presidency want to increase spending and get rid of the tax cuts. Either way this means increasing the deficit, which is the government’s debt.