The so-called fiscal cliff is an economy-rattling combination of expiring Bush- and Obama-era tax cuts and major across-the-board spending cuts to the Pentagon and domestic programs.
The cliff is the punishment for previous failures of a bitterly divided Congress and White House to deal with the government's spiraling debt or overhaul its unwieldy tax code. The Congressional Budget Office estimates that the austerity program would reduce the deficit by $503 billion through the end of next September — or approaching $700 billion for the entire calendar year. CBO says millions of jobs could be lost.
The fiscal cliff includes:
—The expiration of Bush-era tax cuts on income, investments, married couples and families with children and inheritances. In addition, some 26 million additional face the alternative minimum tax next filing season, which would raise their taxes by an average of $3,700. Cost through September: $330 billion.
—A $55 billion, 9 percent cut in the defense budget next year and another $55 billion in cuts to domestic programs, including a 2 percent cut to Medicare providers.