First uttered by Bernanke, the term fiscal cliff entered the political lexicon as a means of describing what would happen to the U.S. economy if a default budget agreed to in 2011 was not eclipsed by a better option before Jan. 1. A day late, lawmakers in Washington came up with the tax half of a new plan that increased federal income taxes for couples earning more than $450,000 per year and individuals earning more then $400,000.
There were a few other tax tweaks, but the most critical effect of the tax deal is it took away the default budget option. No more fiscal cliff, a metaphor that would have had Bernanke retiring early had he charged a nickel every time it was used.
Metaphor aside, it was predicted the dastardly default budget that nobody liked would have plunged the U.S. economy back into a recession. Now what could be scarier than that?
Some economists have postulated that the next collision in Washington revolves around spending and those decisions are contingent on raising the debt ceiling, which is typically a routine matter that Republicans now use as a fiscal weapon.
The rules of the game are simple enough: Republicans want to cut spending to reduce not only the size of government but the $16.4 trillion federal debt. If no deal is available, they will refuse to increase the spending limit, which would quickly throw the government into default. And that would make the fiscal cliff, some say, look like a plastic slide at a kiddie pool.
The current dilemma could be called a "fiscal time bomb," "fiscal collision" or "budget brick wall," but probably the most accurate metaphor is "fiscal suicide."
Sadly, with the kick-the-can-down-the-road mentality in Washington, the government has already blown past the debt ceiling with the Treasury Department now using a few budget tricks to pretend there is still money for paying the government's bills.
With that said, actually finding a date on which the government goes into default involves some calculated guesswork.
The Bipartisan Policy Center points to Feb. 15 as D-Day, given revenues expected on that day alone will come to $9 billion and, as it happens, there will be about $52 billion in payments coming due on the same day.
In an effort to contain the impending fiscal wildfire, Rep. Daniel Webster, R-Fla., has written a bill that stipulates that an almost-broke Treasury would pay bondholders holding U.S. debt first, then the military, then "national security priorities," then Social Security, then Medicare.
How telling is that?
There are other stalling strategies in discussion, including having the Treasury reduce payments across-the-board.
The strategy that will best appease credit rating companies, of course, is anything that allows for continued payment of bondholders. Letting bondholders down would be a fiscal faux pas of mammoth proportions.
In international markets Friday, the Nikkei 225 index in Japan added 2.86 percent and the Shanghai composite index in China gained 1.41 percent. The Hang Seng index in Hong Kong climbed 1.12 percent and the Sensex in India rose 0.38 percent.
The S&P/ASX 200 in Australia rose 0.31 percent.
In midday trading in Europe, the FTSE 100 index in Britain climbed 0.6 percent, while the DAX 30 in Germany shed 0.16 percent. The CAC 40 in France added 0.16 percent and the Stoxx Europe 600 gained 0.11 percent.