Not a cliff
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On Monday, the US will be teetering on the edge of a fiscal cliff and if President Barack Obama and the Speaker of the House of Representatives, John Boehner, cannot agree on a long-term financial deal by midnight, the nation might plunge into another recession. But this cliffhanger account of the world's most important economy fighting to secure fiscal prudence in the face of ruin is not completely accurate. There is no fiscal cliff, only a rocky fiscal slope. US lawmakers have been regarding it moodily for a year, and they will probably continue to do so after the deadline passes on Monday, as they search for a delayed but nuanced solution.
Or they may find a compromise within the deadline. They have failed to do so for months, but politicians do become intransigent in election years as they seek to sharply differentiate themselves from the competition. Now that the deadline is upon them, they will probably do their duty by the nation. The fiscal cliff is a set of measures that will end tax breaks, some dating back to the Bush era, and kick in fresh taxes to fund Obama's public health law. In addition, spending cuts, agreed upon when the federal debt ceiling was raised in 2011, will come into effect. If there is no deal, these measures will slash the deficit but also curb jobs and trigger a slowdown. If the fiscal cliff measures are spurned, the deficit could continue to grow. In between lies the least unattractive path — hike taxes and slow down growth, but only a little. This would be a temporary fix, leaving the US on that rocky slope pending a considered, long-term deal.
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