The worst outcomes of the “fiscal cliff” were averted for now with President Barack Obama’s signing into law the American Taxpayer Relief Act (ATRA) on January 2. In addition to permanently extending most of the 2001 and 2003 temporary tax cuts, the new law includes spending cuts to prevent a nearly $27 billion cut to Medicare physician reimbursement rates in 2013, and delays sequestration—automatic across-the-board spending cuts to federal discretionary spending and a 2 percent cut to other Medicare services initially scheduled to take effect January 2, 2013—for 2 months until March 2013.
The new March deadline enacted for dealing with sequestration also coincides with two other major deadlines. The U.S. government faces a possible government shutdown in March (when current appropriations for government expire) unless Congress approves appropriations for the remainder of Fiscal Year (FY) 2013. Moreover, the United States government will default on its debt soon unless Congress raises the “debt ceiling,” the legal limit of how much debt the United States can assume.