By Scott Ronalds

You’ve likely heard the term fiscal cliff lately. A catchy, if not chilling phrase, but what does it mean?

Put simply, it refers to the combination of (1) billions of dollars of tax increases and (2) widespread spending cuts to government programs, all set to take effect in the U.S. on January 1st. The worry is that the sudden impact of these measures would be too much of a shock for the economy, and may lead to a recession. The so-called cliff can be avoided if the President and Republicans can agree to extend current tax cuts and spending programs, and work together on alternative solutions for reducing the deficit.

The New York Times published a Q&A piece yesterday that provides some excellent background and seeks to demystify the fiscal impasse. It’s a good resource on this craggy dilemma.