So basically, Congress passed a big extension of tax cuts - or rather, they decreased the tax cuts that would have happened from the fiscal cliff. But they have not done anything to reduce spending! US hit the debt limit on 1/1/2013 - Geithner is financing the next 2 months through “extraordinary measures”. In 2 months, Congress must vote to extend the debt ceiling, or US will default on debt.
Wait… Isn’t this what happened in 2012? The debt limit was the reason that the “fiscal cliff” was implemented in the first place! S&P downgraded US debt specifically for this reason. In 2 months, there will be a big fight between Democrats, who want to increase debt, and Republicans, who would rather decrease spending. Neither side will have the “middle class” taxes as leverage, now that the tax policy has been set.
It seems like people have been distracted by the fiscal cliff itself and have forgotten about the root of the problem.