Budget Matters Blog

Here are the top 5 things you need to know  about the fiscal cliff deal enacted by Congress this week:

1)  Extends the Bush-Era Tax Cuts: The Bush-era tax cuts were scheduled to expire on Dec. 31. The tax cuts benefited nearly every American taxpayer, though they offered the most generous benefits to the wealthiest Americans. Congress permanently extended the tax rates on income below $400,000 for individuals and $450,000 for couples, and raised the rate on capital gains and dividends from 15 percent to 20 percent for income above the same threshold. Tax rates will rise for ...

The White House/ flickr

2013 and the fiscal cliff will arrive in a few hours, though today's most popular Google search is about Kim Kardashian's pregnancy. After all, we can only take so much news about something called the "fiscal cliff." But it actually makes a difference whether we're paying attention to Kim Kardashian or to what's happening in Washington.

The 112th Congress, which will disband in a few days, has been one of the least productive in recent memory. This Congress struggled even to pass routine legislation. For instance, you might remember that lawmakers brought ...

Speaker Boehner's photostream/ flickr

There have been few outward signs of progress in recent days as Congress and the White House negotiate over the so-called fiscal cliff. (We prefer to call it a fiscal obstacle course.) Naturally that's led to speculation that lawmakers won't be able to strike a deal to avoid the looming spending cuts and tax increases.

But if history is any guide, we shouldn't expect a deal in the weeks leading up to Christmas. On the contrary. We should look for a deal around the evening of Dec. 31, or even – perhaps – a ...

The U.S. National Archives/ flickr

A reader from Shelby Township, Michigan, wrote to us to ask about the Bush-era tax cuts. "How much revenue would the federal government get," he wrote, "if taxes were raised on the people making more than $200,000 per year?" It's a very timely question. Bush-era tax cuts for high earners are the most contentious part of negotiations raging over the so-called fiscal cliff.

In Washington, Republican lawmakers have put their support behind extending the entire package of Bush-era tax cuts while Democrats say they want to see the tax cuts expire for ...

The White House/ flickr

Last week I wrote a post called Fiscal Cliff Definition, with a simple explanation of the much-hyped, so-called fiscal cliff. (I also suggested that we call it a "fiscal obstacle course" instead of a cliff, because that's a more appropriate metaphor.) The next important question is: What's going to happen?

While it's anyone's guess exactly what deal Congress and the president will agree on, we do know the major components of negotiations happening right now. The final deal will involve some combination of the following:

Spending Cuts

Currently across-the-board spending cuts are ...

Not a Cliff, An Obstacle Course  Allan Paquette/ flickr

With all the talk about the "fiscal cliff," it seems that one important thing has been left out: A simple definition of what is the fiscal cliff.

"Fiscal cliff" refers to a host of different federal budget cuts and tax increases that are all scheduled to take effect at the start of 2013. These looming budget cuts and tax increases are referred to as a "cliff" because, if they all actually took effect in 2013, it would be a major setback for our weak economy.

But here's the good news ...

In the wake of the elections, Democrats and Republicans are pledging to work together to solve the fiscal cliff and other daunting challenges that confront the current lame duck session of Congress.But how likely is that, really? For example, both sides claim that the election was a mandate for their respective position on the expiring Bush-era tax cuts. President Obama is proclaiming broad support for extending tax breaks for the middle class while getting the wealthy to pay more, and House Speaker John Boehner sees validation for the GOP’s position – no raising taxes, period.Many Washington watchers ask ...

Last week we got a call from Ayesha in Houston, Texas. She said she heard Obamacare will be funded through taxes, so she wanted to know how much more she'd have to pay. Here's the scoop.

Only some people will pay higher taxes as a result of Obamacare. Will you be one of them? Here's how to tell. First, if you make more than $200,000 per year (or $250,000 as a married couple), then you should expect to pay additional taxes to fund the health reform law. And second, if you don't have health ...

Last week, on the heels of the Republican convention, my colleague Chris Hellman wrote here about the Republican Party platform and its implications for the federal budget. With the Democratic convention in Charlotte behind us, let's check out the Democratic platform approved by the party last week.

Democrats would extend the Bush-era tax cuts for American families making less than $250,000, and allow the tax cuts to expire for taxpayers making more than that amount. Democrats also propose closing tax loopholes and deductions that benefit the wealthiest Americans and the largest corporations. Not surprisingly, these proposals are in ...

Last week President Obama affirmed his support for letting the Bush-era tax cuts expire for American families making over $250,000. There was a flurry of activity on our Facebook page as folks debated the merits of extending all the tax cuts versus allowing them to expire for upper-income taxpayers.

Heated debate.

And there were lots of questions and some confusion over who benefits from these tax cuts, which were originally passed by President George W. Bush and were extended by President Obama in 2010. These tax cuts benefit nearly every American family, though they've been criticized heavily for ...