The fiscal cliff | American civics | US government and civics | Khan Academy

The fiscal cliff refers to a United States federal budget crisis that occurred on January 1, 2013. At that time, both federal spending would be reduced and tax cuts would expire, which experts feared would harm the already-fragile US economy by taking a great deal of money out of circulation. Congress passed a budget compromise within 24 hours of the "fiscal cliff," but the compromise only delayed dealing with the issue, which reemerged with the debt-ceiling crisis of October 2013. Created by Sal Khan.

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[mathteacher]

Hi Sal,

Your financial videos are among my favorite. You evenhandedly speak with deep knowledge & insight. Two requests:

1. Please make a video explaining the relative order of magnitude of "Millions", "Billions" and "Trillions".
2. Express all amounts in terms of one unit. (In this case, everything in terms of Trillions.)

Many think 500 M > 98 B > 1.2 T (because 500 > 98 > 1.2) and I think you would be the person to clarify the matter due to your tremendous audience.

Cheers,
Joe

[scter]

I am so grateful to Sal for explaining this sort of thing. No one else explains this sort of thing in such a clear and unbiased way. What a relief! Thanks, Sal

[scter]

Please Sal! Write lots more about fiscal topics! You have no idea how much your explanations help so many of us understand how fiscal, financial and economic realities affect our lives. It is really scary feeling that one is "the dummy at the poker table!" Understanding these concepts gives all of us a window into the nature of our species.

[khanacademy]

Yes, added the annotation because of your comment. Thank you for catching that!

[AvailedGuides]

I recently wrote a paper on the issue technology is having on the intelligence of the average technology user, in which it was clearly demonstrated and supported that many people are losing their capability to focus on anything for more than a few minutes, and thus are learning at a much slower pace because they cannot sit down and read a book for more than a chapter or two, or watch a video that isn't a popcorn flick. I just wanted to thank you for demonstrating the accuracy of my thesis, Ray.

[ChristEnabled]

You my friend actually make sense, probably one of the few people to post on this video who has actually, maybe taken an economics class.

[dasikalyan]

Excellent!.. I can now follow what these radio talk show hosts and guests are talking about! instead of leaving it as jargon..

[ddropik]

Thanks. This video helps explain the topic in a general way so that I can understand some of the underlying principles, and I have a pretty good confidence that this explanation seeks to be free of any political leanings.

[pnogas]

I love how you teach current day issues in addition to unchanging things like Pythagorean's theorem.

[pauluk]

1) What was the 'rationale' for Dubya's tax cuts?

2) Since they came in, how much revenue hasn't the govt collected that it could have?

3) What would the
a) cumulative debt be today
b) the current level of deficit?

Thanks

[boucaques]

One other thing: You made mention in "investments for the future". Here's a list of "stimulus" companies that have gone under and the amounts of money each has cost the taxpayer: Solyndra (received $535 million), Beacon Power (received $43 million, Nevada Geothermal (received $98.5 million), SunPower (received $1.5 billion), First Solar (received $1.46 billion), Babcock & Brown (an Australian company which received $178 million)
Ener1 (subsidiary EnerDel received $118.5 million)

[Gunasekar]

Extremely informative!
Thank you Khan academy.

[Trepur]

I did answer: tax elasticity, mass mobility and private sector jobs.
Tax elasticity: The willinginess to pay taxes based on the rate. The rich are more likely to try to avoid high taxes and are less likely to try to avoid low taxes then the middle class
Mass mobility: The rich are the only people in the world who are capable of moving city etc. to avoid taxes, and do so.
Priave sector jobs: explained above

I am an econ major, my 'simplistic' view above was in hopes of making you understand it

[RBdreams]

Very informative. I have a better understanding of what that term means and entails.

[honrilful]

You do that, I can not wait for more of such gems as «Government has grown to a size where everywhere». I honestly do not know what you are trying to say there.

[boucaques]

Keep it going!: Amonix (received 5.9 million), Abound Solar (received $400 million), A123 Systems (received $279 million), Willard & Kelsey Solar Group (received $6 million)
Johnson Controls (received $299 million), Schneider Electric (received $86 million). There's a bunch more but I have to get to work and I don't have time right now. But: just as an FYI: The amount of money in tax revenue lost to the treasury in tax incentives of all oil companies combined is...$4 billion. Hmmmm...

[countinglampposts]

He actually has a point. 16.4% of the debt is owned by social security trust funds and another 42.8% of the debt is owned by US individuals and institutions. However we HAVE to pay it back otherwise we will not be able to run a deficit again which is very necessary to stimulate the economy during a recession.

[HigherPlanes]

I think the problem is we were mixing up terms. Stocks can be paid out in dividends for example, or if you want to liquidate your stocks, the exchange could be currency. So there's a direct correlation between a stock and it's effect on the monetary system.

[Pyrrhic.]

Someone had to make this video. Thank you for making it

[NamPhan]

Finally! i needed the explanation to this 'fiscal cliff'