Budget Talks & Fiscal Cliff - Explained - Cheat Sheet

UPDATE: As of Jan 1st, 2013 the Fiscal Cliff was eliminated by passing American Taxpayer Relief Act of 2012.
The 2013 deficit will increase by $330 Billion instead of decreasing. The following budget adjustments have been made:
The +19.63% increase in revenue is now +7.51% and the 0.25% decrease in spending is now a +1.87% spending increase.
The Fiscal Cliff
is the name given for the 2013 increase of Federal Government taxes and budget cuts.
The Bush-era tax cuts expire and the 2013 "Budget Control Act" kicks in, among other budget cuts & new taxes.
The Fiscal Cliff is set to reduce the 2013 US Government budget deficit by roughly half.
The Fiscal Cliff will remove $607 Billion from economy (GDP), resulting in 4% drop, pushing it back into recession.
The Fiscal Cliff can NOT be avoided. It must happen to fix the budget deficit; any delay must be paid for later.
The Fiscal Cliff will NOT reduce the US debt, only slow down the growth. - $100 - One Hundred Dollars
$100 Dollars
$100 - Most counterfeited money denomination in the world.
Keeps the world moving.
$10,000 Dollars
$10,000 - Enough for a great vacation or to buy a used car.
Approximately one year of work for the average human on earth. - $10,000 - Ten Thousand Dollars

$1 Million Dollars
$1,000,000 - Not as big of a pile as you thought, huh?
Still, this is 92 years of work for the average human on earth. - $1,000,000 - One Million Dollars
$100 Million Dollars
$100,000,000 - Plenty to go around for everyone.
Fits nicely on an ISO / Military standard sized pallet.

The couch is made from $46.7 million of crispy $100 bills. - $100,000,000 - One Hundred Million Dollars

$100 Million Dollars provides 2000 jobs @ $50,000 / year

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.




$100 Million Dollars

Enough to keep 2000 people employed for 1 year @ $50,000 / year - $100,000,000 - One Hundred Million Dollars

$1 Billion Dollars
$1,000,000,000 - You will need some help when robbing the bank.
Interesting fact: $1 million dollars weighs 10kg exactly.
You are looking at 10 tons of money on those pallets.

2013 US Government Budget scenarios:
Jan 1, 2013 budget agreement ATRA 2012 (current) bill vs the Fiscal Cliff
Budget w/ ATRA 2012
Budget w/ Fiscal Cliff

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.

Color Map
Label - Red White - FY 2013 Budget with ATRA 2012
American Taxpayer Relief Act of 2012 eliminated the Fiscal Cliff
Label - Orange Dark Gray - FY 2013 Budget with Fiscal Cliff scenario
Label - Green Red - Budget Deficit
Label - Blue Yellow - Tax Revenue
Based on FY2012 Tax Revenue (enacted)
Label - Magenda Orange - Budget Deficit turned into new Taxes
Label - Teal Green - Budget Deficit turned into Spending Cuts
Label - Yellow Purple - Budget Deficit increased by new spending

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.



Spending Increase
$70.9 Billion


Red: Total Deficit w/ ATRA 2012
$1212 Billion


White: Budget w/ ATRA 2012
$3681.56 Billion


Deficit turned into Taxes
$185.4 Billion


Deficit turned into Taxes
$484.6 Billion


Tax Revenue
$2469 Billion


Tax Revenue
$2469 Billion


Budget Cuts
$9.49 Billion


Gray: Budget w/ Fiscal Cliff
Red: Total Deficit w/ Fiscal Cliff
$832.91 Billion

Original Fiscal Cliff was an increase in taxes & reduction in Govt' spending

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.

Fiscal Cliff Budget Breakdown as of Jan 1st, 2013 w/ passage of ATRA 2012
Label - Red $221B - Expiration of tax cuts [Now permanent for people making under $400k/yr)
Expiration of tax cuts and the subsequent growth in the AMT: $221B (36.41%)
Label - Orange $105B - Other changes
Other changes (mostly revenue, primarily reflecting economic growth): $105B (17.30%)
Label - Green $95B - Expiration of 2% FICA tax cut
Expiration of 2% FICA payroll tax cut: $95B (15.65%))
Label - Blue $65B Other expiring tax provisions [Partially Extended]
Other expiring tax provisions: $65B (10.71%)
Label - Magenda $65B - Spending cuts [Delayed until March 2013]
Spending cuts ("sequestration") under the Budget Control Act of 2011: $65B (10.71%)
Label - Teal $26B - Expiration of unemployment insurance [Extended until 2014]
Expiration of federal emergency unemployment insurance: $26B (4.28%)
Label - Yellow $18B - Obamacare taxes
Affordable Care Act taxes: $18B (3.97%)
Label - Maroon $11B - Reduction in Medicare [Extended until 2014]
Reduction in Medicare payment for doctors: $11B (1.81%) - $1,000,000,000,000 - One Trillion Dollars

Original 2012 Fiscal Cliff Plan:
Part 1 of 2: New Taxes

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.

$222.7 Billion Bonus: Corporate Tax Subsidies

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

$400 Billion
New taxes in 2013
$2502 Billion
Existing Taxes 2013

$222.7 Billion
Corporate Tax Breaks (Subsidies 2008-10) - 1,000,000,000,000 - 1 Trillion Dollars Comparison



Original 2012 Fiscal Cliff Plan:
Part 2 of 2: Budget Cuts

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


$2 Billion Semi-Truck


Originally intended 2013 Budget Cuts
$207 Billion
US Government Budget 2012
$3796 Billion - $16,394 Trillion - US Debt Ceiling
Original 2012 Fiscal Cliff's Deficit Reduction Effect

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

Original 2012 Fiscal Cliff's Deficit Reduction


2012 US Gov budget expenses
$3796 Billion (surrounded by wall)
RED: Deficit Portion
of US Gov't Budget
(Borrowed money in 2012)

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Fiscal Cliff - Budget Cuts
$207 Billion


Fiscal Cliff: Tax Increases
$400 Billion
Fiscal Cliff 2012 Deficit Reduction Chart
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