This memorandum provides an overview of the deal reached on the so called “fiscal cliff” issues. The legislation passed by Congress and expected to be signed by the President delays the sequester for two months, extends expiring tax cuts for a large majority of taxpayers and for certain education-related purposes, permanently prevents the Alternative Minimum Tax from applying to additional taxpayers, and provides a one-year delay in lower fees for Medicare providers (the so-called doc-fix). This legislation did not extend the existing Federal debt limit. This will essentially link the debates around the sequester, extension of the Federal debt limit, and final FY 2013 appropriations. The current Continuing Resolution funds the Federal government through March 27, 2013. Without future action by Congress, sequestration and its corresponding cuts to non-defense discretionary programs (those that are funded through annual appropriations bills) in FY 2013 funding levels will take place beginning in March.
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Fiscal Cliff Agreement Overview (127 Kb)