Now that the House of Representatives has virtually rubber-stamped the Senate bill to avoid going over the fiscal cliff — the so-called American Taxpayer Relief Act of 2012 (ATRA) — which President Obama is expected to sign shortly, commentators have been working feverishly to determine exactly what is in the 157-page bill that no one had time to read after being rushed to completion at the very last minute.
The analysis by the Congressional Budget Office (CBO) measured the impact of ATRA against its baseline assumption that the congress would do nothing and let all the pieces and parts of the fiscal cliff occur automatically. In that baseline, annual government deficits would have been cut in half, from $1.1 trillion to about $640 billion. Under the new law, the national debt will increase by $4 trillion over the CBO’s 10-year baseline — from $2.9 trillion to nearly $7 trillion.
When David Lawder, writing for Yahoo! News, looked at the CBO’s analysis, he concluded:
By going over the fiscal cliff, the CBO had previously forecast that the higher taxes and lower spending would slash the fiscal 2013 U.S. budget deficit by more than half, to $641 billion from $1.1 trillion the prior year.
But in its analysis of the Senate-passed plan, the CBO said fiscal 2013 revenues would be $280 billion lower and spending $50 billion higher, resulting in a $330 billion deficit increase, for a total deficit of around $971 billion.
In other words, all the noise that has kept the fiscal cliff topic front and center at every media outlet over the last month has come to this: Next year's deficit will be reduced from $1.1 trillion to $1 trillion.
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