For years the Congressional Budget Office has been warning that the federal government’s fiscal course is “unsustainable.” And for just as long, Congress has refused to do anything about it, preferring to defer and delay whenever possible. This fiscal Jenga tower starts to come crashing down on January 2, when inaction-as-usual will suddenly become a major policy decision. Starting on that day, several of Congress’ kick-the-can games are scheduled to end. At the same time, a series of reductions in planned federal spending will also kick in, thanks to the last round of congressional failure to deal with long-term fiscal problems.
That combination has been widely described as “the fiscal cliff.” Unless Congress acts at the last minute, the federal budget may go flying over the ledge—and possibly take the nation’s economy with it. So what should Congress do about the fiscal cliff? For our January 2013 issue, Reason asked a group of experienced budget policy watchers to explain what the problems are, what we can do about them, and what might happen if we don’t.