In the United States, the term "fiscal cliff" is popular jargon to describe the consequences of expiring tax concessions and widespread federal government spending cuts that by law would have become effective on 31 December 2012.
The belief is that higher taxes and lower government spending will negatively affect nascent US economic growth, possibly forcing that economy into recession. The word "cliff" implies immediate, destructive and irrevocable consequences, but there is no consensus amongst economists regarding the pace or severity of the impact.
The expiring tax concessions are largely those popularly known as the "Bush tax cuts", implemented in 2001 and 2003 and extended by the Obama administration from 2010 to 2012. The Federal expenditure cuts were codified into law as a compromise measure under the Budget Control Act of 2011, which was enacted in response to the debt ceiling crisis of 2011.
Because 2012 was a presidential election year, Congress delayed implementation of a plan to remedy the concurrent results of tax increases and government spending cuts until after the November presidential elections. Republicans and Democrats ultimately only passed legislation on the 2 January 2013 that preserves the tax cuts for most American households with taxes rising for only the wealthiest taxpayers.