For months, politicians have railed about the fiscal cliff while pundits across the political spectrum have held forth on the apocalyptic economic repercussions of our reaching Jan. 1, 2013 without a deal to avert it. But as the dread date draws nearer -- and negotiations between the White House and Capitol Hill grow more frenzied -- it is growing ever harder to separate the rough reality from the hellish hype.
To help you sort through the spin and fluff, we've compiled our very own fiscal cliff quiz. If you think you know all about the forthcoming economic apocalypse -- or if you're just wondering what all the fuss is about -- here's your chance to test your knowledge of the biggest economic crisis of this news cycle!
Fiscal Cliff Pop Quiz: Fun Facts from the Forthcoming Economic Apocalypse
A. Ben Bernanke
B. Erin Burnett
C. Timothy Geithner
D. John McCain
Some nitpickers argue that the term was coined in the late 1980s, but most experts agree that the first person to use it in its current context was Federal Reserve Chairman Ben Bernanke. Speaking before Congress in late February 2012, Bernanke explained America's looming financial crisis, stating: "Under current law, on Jan. 1, 2013, there's going to be a massive fiscal cliff of large spending cuts and tax increases."
A. $100 billion
B. $300 billion
C. $500 billion
D. $700 billion
With $500 billion in increased tax revenue and $200 billion in mandatory spending cuts, the fiscal cliff would quickly chip away at America's debt -- in theory. The trouble is, the hikes in taxes and the deep, across-the-board cuts to government spending would cause massive job losses and send the country spiraling into recession -- which would inevitably mean a big hit to Washington's tax revenues.
C. No, but don't tell that to President Obama
Increases to America's debt limit have traditionally been quick, procedural affairs, but in 2011, congressional Republicans staged a revolt, refusing to increase the debt ceiling unless the president agreed to deep budget cuts. The ensuing battle led to a downgrade in America's credit rating, and the ultimate deal led to the automatic cuts that now threaten the country. Many experts predict that the president will try to forestall a repeat of 2011 by making a debt ceiling increase a part of any deal.
A. The sequester
B. The end of the Bush tax cuts
C. The increase in capital gains taxes
D. The end of the payroll tax holiday
The White House argues that a trip over the fiscal cliff will cost the average family about $2,200 next year, but most of that cost will be slowly phased in. The expiration of the payroll tax holiday, however, will start cutting into paychecks on the first payday of 2013. By allowing payroll taxes to revert to their previous levels, the holiday will effectively cut 2% from the wages of everyone making up to $110,000 per year. For the average family, that works out to $1,000 per year, or about $20 per week.
A. $1 in taxes to $2 in cuts
B. $1 in taxes to $3 in cuts
C. $2 in taxes to $1 in cuts
D. $3 in taxes to $1 in cuts
Obama's proposed "grand bargain" offered up to $3 in budget cuts for every $1 in tax increases. Some experts now estimate that the ultimate compromise on taxes could work out to $1.50 in budget cuts for every $1 in revenue increases.
A. $1,120 per day
B. $2,270 per day
C. $3,540 per day
D. $4,780 per day
When the 2011 talks between Obama and Boehner failed, the famed Congressional "Supercommittee" was created to broker a budget agreement. Featuring six congressmen and six senators, the committee failed miserably, but its members made out well. According to the Project on Government Oversight, the twelve members raked in an average of $2,270 a day in additional campaign donations. Given that their negotiations touched on every facet of government spending, from Medicare to defense contracts to school funding, it isn't hard to imagine why more than a few groups lined up to write checks.
A. The fiscal slope
B. The fiscal obstacle course
C. The Big Lebowski
D. The austerity crisis
Actually, all of them have been used. As pundits have pointed out, the fiscal cliff will likely not be a cliff at all; rather, the combination of budget cuts and tax increases will unfold over several months. Several pundits have offered more accurate names, including The Center on Budget and Policy Priorities' "fiscal slope," and the Century Foundation's "fiscal obstacle course." The Washington Post's Wonkblog ran a reader contest to come up with the best name. The winner, "the austerity crisis," beat out a host of other suggestions, including "the policy meltdown," "Catch 2012," "the fiscal staircase," and "The Big Lebowski" ("because everything is screwed up and is a big charade").