Fiscal Cliff is a term for the economic effect for the unprecedented structural hole in the state budget - the difference between federal spending and revenues, which threatened the U.S. in late 2012.
The reason for the fiscal cliff is the long-term fact that revenue is not enough to cover rising costs (spending on public services) and also the fact that tax rates (tax credits) that had been cut ten years ago will expire. At the end of 2012, there were negotiations on the debt ceiling and its disapproval threatened U.S. economy to “fall from the fiscal cliff” - the massive reduction of government spending while raising taxes from January 2013, which could have a negative impact on GDP to fall by 4%.
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