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On January 2, 2013, President Obama signed the American Taxpayer Relief Act of 2012 (ATRA). The ATRA averted most of the negative consequences posed by the huge pending tax increase portion of the fiscal cliff. However, the Act gave only a temporary reprieve to the budget cuts that were also part of the fiscal cliff.
The impact of falling off the fiscal cliff will be very difficult for the defense industry--both for primes and the supplier base.
Although the impact of the fiscal cliff on defense spending is often the most reported factor, there is substantial risk for non-defense programs as well.
Tax relief vital to the continued success of our economy would cease if our economy falls off the fiscal cliff.
According to the Congressional Budget Office, major components of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 are set to expire without a budget agreement.
Estimates say the effects of budget sequestration would be to reduce the Gross Domestic Product (GDP) by $215 billion in FY2013 and eliminate the jobs of more than 2 million Americans.
