Get a point-by-point summary of just what the fiscal cliff is and what happens if we go over it.
The "fiscal cliff" is a combination of dramatic spending cuts and tax increases mandated to take effect beginning January 2013 if Democratic and Republican lawmakers cannot bridge their differences on how best to reduce the nation's budget deficit and debt.
WHAT IS IT?
The Budget Control Act of 2011, set into law in a grudging political compromise in August that year, forces the government to slash spending by $1.2 trillion over 10 years from Jan. 1, 2013. Next year's cuts, called "sequestration," would be about $109 billion.
What's the Fiscal Cliff About? Also on that date, a package of tax reductions set or extended in 2010 to spur economic growth, as well as an extension of unemployment benefits, will expire, meaning taxes will rise significantly for most Americans.
WHY WILL THIS HAPPEN?
Democrats and Republicans have long been deadlocked over whether to address a $1 trillion-plus annual budget gap with higher taxes or lower spending.