Home > Federal Government, Federal Taxes > The Fiscal Cliff in Simple Terms

The Fiscal Cliff in Simple Terms

Well, the House just passed the Senate bill and sent it on to the President. To put this in perspective I put together the following table to help explain what little good has just taken place.

The Fiscal Cliff

Federal Budget


Federal  Revenue


New Debt


National Debt


Proposed Budget Cuts


Increased Taxes


In Family Budget Terms

2012 Annual Expenses


2012 Annual Income


Net Loss from 2012 (New Debt)


Existing Home Loan


You Now Owe


To Solve Your Problem You

Cancel Your Newspaper Subscription


Have a Yard Sale


The Result

Net Loss For 2013



Sadly, this is barely a drop in the bucket…and it took how long to arrive at this?

Oh, and there is still the matter of the debt ceiling to deal with. A friend of mine sent me the following scenario:

You come home from a trip to town to discover that due to a major city sewage malfunction your house has become filled with refuse. What do you do? Raise the ceiling or get rid of the crap and clean the house?

Sorry folks, but all of D.C. needs to get a loud and clear message to get serious, start working together and solve this mess.

By the way…Happy New Year!!






  1. January 1, 2013 at 10:14 PM

    This “Fiscal Cliff” drama and excersize was and is a national disgrace. Shame, shame, shame.

  2. January 1, 2013 at 10:32 PM


    But if deficit reduction is your goal, then doing absolutely nothing and going over the so-called cliff would have been Congress’ best bet. Yet nobody seemed to think that was a good idea

    • January 2, 2013 at 11:19 AM

      I thought it was a good idea to go over the cliff too………

    • Jim Cook
      January 2, 2013 at 2:15 PM

      I had begun believing that this was the “plan”. At least “they” could blame someone else so the voters could re-elect them.

  3. Robin R.
    January 2, 2013 at 5:59 AM

    Great explanation in an easy to understand manner.
    Thanks Jeff!

  4. Robin R.
    January 2, 2013 at 9:00 AM

    The recently passed legislation did:

    (1) Prevent individuals earning less than $400,000 and families earning less than $450,00 from having their taxes go up.
    2) Continue unemployment benefits for those who have been unemployed for less than 52 weeks
    3) Increase the taxes on income over $400,000 for individuals and over $450,000 for families. (However, please note the first $400,000 and $450,000 will continue to be taxed at the previous rate – only the amount of income above those amounts will be taxed more)
    4) Tax estates valued at over $5 million.

    Reforms on spending have been “kicked down the road” another 2 months… more yard sales coming soon.

  5. Toni
    January 2, 2013 at 4:12 PM

    Yeah I agree. For some “strange reason” they simply can’t arrive at the same solution that adults all over America arrive at: STOP SPENDING MONEY. Both sides of the aisle are guilty of this; that is why it is SUCH A PROBLEM. We the PEOPLE need to come up with a way that they CANNOT spend so much money… like FORBIDDING them to give it to other countries, or people that should not get it and investments? The government has NO BUSINESS out in the public sector making investments with OUR MONEY. When they do, GM or SOLENDRA happens….. need I say more?

  6. Don
    January 3, 2013 at 9:57 PM

    Good analysis Jeff. Get rid of the “crap”. The problem is too many Americans are sucking off the government “tit” and are happy being taken care of. God, how sad this country has become

  7. January 4, 2013 at 12:22 PM

    One way to deal with this is to call a moratorium on all new regulation … this will hold down implementation expenses, costs of defense for lawsuits from activist groups, and depressing the tax base further. What must the entire world think that we cannot head off here what has already happened to Greece and others…

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