Author Description

The federal budget deficit has exceeded $1 trillion in each of the last four fiscal years (FY2009- FY2012). Concern over these large deficits, as well as the long-term trajectory of the federal budget, resulted in significant debate during the 112th Congress over how to achieve meaningful deficit reduction and how to implement a plan to stabilize the federal debt. Numerous expiring provisions, across-the-board spending cuts, and other short-term considerations having a major budgetary impact, were scheduled to take effect at the very end of 2012 or in early 2013. This combination of policies, estimated by CBO to reduce the deficit by $502 billion between FY2012 and FY2013, was referred to by some as the "fiscal cliff." Had these policies taken effect, CBO projected that the economy would have returned to recession in FY2013. On January 2, 2013, President Obama signed into law the American Taxpayer Relief Act of 2012 (ATRA; H.R. 8 as enacted), which addressed many of these tax and spending policies. As Congress changed the trajectory of these policies by increasing spending and decreasing revenue, these policies have increased the deficit relative to the current law baseline. The provisions of ATRA were estimated by CBO to increase the budget deficit by $330 billion in FY2013 and nearly $4 trillion over the FY2013-FY2022 period.