The celebrations among Democrats following President Obama’s re-election victory did not last long. Attention quickly turned to the ‘fiscal cliff ’.
The term fiscal refers to taxation and government spending. Like many other countries, the USA faces severe fiscal (or budgetary) difficulties. Although there was a budget surplus at the end of the 1990s when tax revenues exceeded federal government spending, the USA has run a persistent budget deficit (whereby expenditure exceeds revenue) since then. In part, this was because of tax reductions and increases in expenditure (through both military spending and measures such as the 2001 No Child Left Behind Act) during the Bush years. However, ‘entitlement’ spending, particularly for senior citizens, on social security and Medicare has also increased rapidly.
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