The "fiscal cliff" and its implications

The Washington Post (see here) has a good explanation of the "fiscal cliff" and its consequences (see chart below, click to enlarge).  The piece reminds us that the "fiscal cliff" is "wonk-speak for a series of major policy changes that will happen automatically at the end of this year if Congress does nothing."

You may have heard some of the questions about this posed to Chairman Bernanke on Tuesday.  The general consensus is that failure to address the policy changes that are set to go in effect will represent a huge "fiscal contraction, one which, according to conventional economic theory, could pose a real threat to the economic recovery."