By Matt Coffey

So we avoided the Fiscal Cliff…

Over the past few months, the major topic of discussion was the Fiscal Cliff that the US was undoubtedly headed towards. Neither party wanted to agree on a solution to the economic crisis that would have increased tax for workers by 2 percent. So what exactly does the term “Fiscal Cliff” mean?

Fiscal Cliff was a term first used by Federal Reserve chairman Ben Bernanke as he attempted to explain the long lasting effects that ending payroll tax cuts would have. These tax cuts were scheduled to end at midnight on Dec. 31, 2012. Both the Senate and the House met late into the evening on the 31st in attempt to draft and pass a deal that would extend the tax breaks.

The senate passed the new deal just two hours after the midnight deadline, while the House didn’t reach an agreement until some 21 hours after that.

There is no doubt that this bill saved our economy from entering a recession again. If no deal would have been reached, and the tax increases were allowed to hit, we would have seen a rise in the unemployment rate, business investment would have halted as well as a drop in consumer demand. Our already slow recovery process, would have taken even longer.

Yes, the deal could have been stronger and more clear. Yes, there were more ways to avoid the Fiscal Cliff. However, this deal saved all working Americans from experiencing drastic tax increases that were not necessary.