Fiscal Cliff

"Fiscal cliff" is the popular term used to describe the dire financial situation that the United States faces at the end of 2012. If the federal government does not enact changes on December 31, 2012, a number of laws will change that will end the 2012 temporary payroll tax cuts, end some tax breaks for businesses and rollback tax cuts made by former President Bush and some of the taxes related to Obamacare. If this happens and America goes over the "cliff," it will affect the national debt and may lead to a recession. Because of political gridlock and in-fighting, Congress had not effectively resolved this pending crisis in the last days of 2012.