Budget Talks & Fiscal Cliff - Explained - Cheat Sheet

Here are 2000 people standing shoulder to shoulder, looking for a job.
The Federal Reserve's mandate is to maintain price stability and low unemployment.
The Federal Reserve prints money based on the assumption that increasing money supply will boost jobs.

A new years 'Fiscal Cliff deal' named "American Taxpayer Relief Act of 2012" (ATRA 2012) was made in Congress, in the 11th hour on Jan 1st, 2013.
The congressmen were given the ATRA 2012 bill at 1:36 AM and they voted on the bill at 1:39 AM. The Congress looked over a 154 page budget bill In 3 minutes, before passing it into law. A bill that contains a pathway for United States' financial future involving trillions of dollars and 300,000,000+ lives.

The new 'Fiscal Cliff deal' dubbed ATRA 2012 makes Bush's Tax cuts permanent for individuals earning less than $400,000/year, for those over it, rates are raised back to 39.6% as it was during Clinton's era. The automatic budget cuts (sequestration) that were agreed during the Debt Ceiling debate of 2011 have been delayed for two months. Obama's temp 2011 Pay-roll tax cuts expired as well, which means $50 less take-home per month for an American earning $30,000/year.

The 'Fiscal Year'- used for US Government accounting purposes starts in October, 3 months early of actual calendar year.
Portions of Fiscal Cliff tax increases & budget cuts would be gradual, starting 3 months into FY 2013 and according to Wikipedia projected to result in a 19.63% increase in revenue and 0.25% reduction in spending year-over-year for fiscal year 2013. With the ATRA 2012 signed into law, eliminated the Fiscal Cliff, the numbers have changed and CBO projected a 7.51% increase in revenue and 1.87% increase in spending for fiscal year 2013, illustrated above based on FY 2012 tax receipts & projected spending.

US Government's 1st Fiscal Quarter of 2013 (Govt's accounting years start & end in October) finished with a $122 Billion per month public debt growth, which will come out far over a $1 Trillion in 1 year. The US Government also surpassed the Debt Ceiling of 16.394 Trillion on Jan 1st, 2013, and will now continue by ravaging pension & other funds to borrow money from, until Debt Ceiling is lifted once again.

The graphic is based on US Government's FY2012 budget of $3796 Billion and CBO's projected Fiscal Cliff' scenario's +19.63% increase in revenue and
0.25% decrease in spending, which is now because of the American Taxpayer Relief Act of 2012 at +7.51% increase in revenue a +1.87% spending increase.

In 2012, the US Government expenses were at 153% of tax revenue.
According to the mainstream Keynesian Economic Theory (practiced by US Government), during hard economic times it is up to the government
to make up for lost demand in private sector by increasing Government (public) spending, by so pushing the economy out of recession.

Fiscal Cliff’s tax increases and budget cuts will remove $607 Billion from the economy, this is highly likely to result in economic slowdown.
The Fiscal Cliff is not so much a cliff, because the effects of taxes & budget cuts will not be felt immediately, but increasingly as 2013 progresses.

Beginning 2013, Americans are to pay more in taxes.
Bush era tax cuts, FICA 2% payroll tax cuts & other tax provisions will expire, Obamacare taxes will show up- this amounts for $400 Billion in new taxes.

Each truck holds $2 Billion, each line is 1.36 miles (7217 feet), for a total truck line length of 2.73 miles, worth $400 Billion.
This is how it could look if taxes were paid physically, instead of electronically.

While the taxes are increasing significantly on American citizens, the largest corporations have enjoyed corporate tax loop-holes.
280 of America's largest companies got $222.7 Billion in tax-breaks between 2008-10, while all of them remained profitable.
67 of the 207 companies' paid effective three-year tax rate of less than 10 percent-- far from the 35% corporate tax code.

Full report here: Corporate Tax Dodges Report

The Fiscal Cliff will cut $207 Billion out of Government budget:

$65 Billion in cuts will come from "Automatic Sequestration", a fancy name for automatic spending cuts that are the consequence of the "Super Committee" failing to come up with a plan to cut $1.5 Trillion over 10 years, which they had to do in order to avoid the "Automatic Sequestration". The sequestrations cuts will be divided equally between Defense and Non-Defense spending.

$26 Billion in cuts will come from the Unemployment Benefit Extension expiring.

$11 Billion in cuts will come from reduction in Medicare Payment Rates.

$105 Billion will come from other spending reductions. Full list here

The Fiscal Cliff exists because the US Government must cut down the deficit spending. The Fiscal Cliff will crack $607 Billion off from US Government budget deficit, erasing approximately half the deficit. The Politicians want to avoid the Fiscal Cliff because it will put the economy in recession, and they don't want to cut funding to their favorite Government (friends) branches-(defense, health care, education, etc). If the Fiscal Cliff is "avoided", then the issue is simply pushed down the road, for another day.
Resolving the Fiscal Cliff will be problematic, due to the strong difference in opinion between Republicans and Democrats.
Eventually it will turn into finger-pointing -- who to blame for the Fiscal Cliff, since there is no way around it, as deficit spending must be cut.

The illustration above shows how it would look if the Fiscal Cliff's deficit cuts were cut out of the 2012's Government Budget.

Data Used:
2012 US Government Enacted Budget & Enacted Deficit.
2012 Fiscal Cliff Wikipedia Data
Additional Sources URLs