By Richard (Rick) Mills
AheadoftheHerd.com

As a general rule, the most successful man in life is the man who has the best information

Increases in taxes and, to a lesser extent, reductions in spending, the infamous $600 billion "Fiscal Cliff" that's looming in the new year, will reduce the US federal budget deficit by 4 - 5.1 percent of Gross Domestic Product (GDP).

But at what cost?

The US Congressional Budget Office (CBO) analyzed two different scenarios if the fiscal cliff was left in place:

  1. As measured by Fiscal Year - the combination of policies under current law will reduce the federal budget deficit by $607 billion, or 4.0 percent of gross domestic product (GDP), between fiscal years 2012 and 2013. The resulting weakening of the economy will lower taxable incomes and raise unemployment, generating a reduction in tax revenues and an increase in spending on such items as unemployment insurance. With that economic feedback incorporated, the deficit will drop by $560 billion between fiscal years 2012 and 2013.