A critical negotiation is occurring right now. The Q&A gives some basic definitions, but the graphic “Staking Out Positions…” is a useful summary of where various sides are lining up. In the past the so-called “Gang of 8” was a way for top Senate leaders to push proposals up the chain–but it doesn’t appear to be working this time around.
Q. If we go over this so-called cliff, what happens?
A. Taxes would rise for nearly every taxpayer and many businesses. Financing for most federal programs, military and domestic, would be cut. Many economists say that while annual budget deficits are too high, these new taxes and spending cuts would be too much deficit reduction, too suddenly, for a weak economy. More than $500 billion equals roughly 3 percent to 4 percent of gross domestic product. The Congressional Budget Office has said the result would be a short recession, though some analysts say the measures could be managed so they do less damage. “Slope,” they argue, is a better metaphor than cliff.