What is a fiscal cliff?

There’s plenty of talk at the moment of America being on the edge of a fiscal cliff. But what does it mean, and what is the origin of the term?

It’s commonly used to describe the combination of tax increases and budget cuts that will come into place on January 1st, unless Congress agrees a deal before then. These could potentially be bad for the economy.

Linguist and language columnist Ben Zimmer explained the origins of the term to NPR:

Well, fiscal cliff was first popularized last February when Federal Reserve Chairman Ben Bernanke warned of the coming fiscal cliff that would take effect with these spending cuts and tax increases. But the term itself has actually been used for a few decades to refer to various types of budget crises.

There was a Dallas Morning News editorial in 1975 when New York City was on the verge of bankruptcy. And it was talking about what would happen if New York City went over the fiscal cliff. So it’s been a powerful metaphor for a while now. (Source: NPR)

The term has become so popular it’s even in contention for word of the year… watch this space.