A Dictionary of the Fiscal Cliff

A brief tutorial on the current crop of economic buzz terms.

By: Carol Ross Joynt

In the post-election period that runs from now until the inauguration, a lot of terms will be thrown around that deal with the economy. They dominated the presidential election and will now become an even bigger part of the daily diet in the media. While familiar to many Washingtonians, these terms are not familiar to everyone, and even those who think they understand what they mean can get confused; old terms die and new terms are born at almost warp speed. Here’s what we hope is a helpful glossary of some common terms.

Fiscal cliff: The phrase was coined by Federal Reserve chairman Ben Bernanke, who used it at House committee hearing to describe a package of $700 billion in spending cuts and tax increases that, if not acted upon, will take place on January 1, 2013.

Sequestration: Though a term that’s been around for years in budget talks, the sequestration you hear about now dates to last summer’s debt ceiling deal, which called for immediate 2013 cuts of $1 trillion in domestic and defense spending and then another $1.2 trillion to be found by Congress over the next decade.

Bush tax cuts: Two acts passed by the administration of President George W. Bush. One is called the Economic Growth and Tax Relief Reconciliation Act of 2001, and the other is an enhanced Jobs and Growth Tax Relief Reconciliation Act of 2003. They were due to expire in 2010, but Congress and the White House negotiated—during the last lame duck session of Congress —an extension called the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010. These acts expire on December 31.

The dynamics: This refers to the new face of Congress after Tuesday’s election, in which the Democrats have a tiny bit more leverage, and the fact that Speaker of the House John Boehner is hinting at compromise.

Political suicide: What some believe will happen to the Republican leadership, including Boehner, if they concede to individual tax rates.

Lame duck or later: The debate over whether to resolve the issues during the current lame-duck session of Congress or find a way to delay talks until the start of the new Congress in January. There are reports that House Republicans, with their current makeup, would like to go now, and that the President would like to wait, because he’ll have more leverage in the new term.