Because Congress failed to agree on a package of fiscal reforms last year, roughly $600 billion in tax increases and spending cuts are set to take effect on January 1, 2013. The so-called “Bush tax cuts” will expire on December 31 of this year, and that will mean huge tax increases for the middle class, about $2,200 a year per family on average. Economists say that this fiscal tightening, combined with massive, mandatory budget cuts called “sequestration,” could, if allowed to continue for the entire year, push the economy back into recession and cause the unemployment rate to rise to 9 percent.
To avoid this “fiscal cliff,” Congress and the President must reach a deficit reduction agreement before the end of this year. Though Democrats and Republicans agree on the need for new revenue, there is sharp disagreement over how much is needed and how it should be raised.
In our report we detail the reasoning behind our view that the Bush tax cuts for the top 2 percent of incomes in the U.S., while those for the middle class and lower incomes should be preserved. We also describe some of the Ohio-specific negative outcomes of going over “the cliff.”