NEW YORK (CNNMoney) — The fiscal cliff deal passed by the Senate Tuesday morning would increase deficits over the next decade by close to $4 trillion, according to the Congressional Budget Office.
But that's relative to where deficits would otherwise be if Congress were to let all the Bush tax cuts expire and keep much if not all of the other tax hikes and spending cuts under the fiscal cliff in place. Under that scenario, only $2.88 trillion would be added to the debt over the next decade.
In effect, that's what the law as of Tuesday morning reflects because Congress hasn't enacted a bill to avert the fiscal cliff.
Most economists say that such abrupt fiscal tightening would hurt economic growth in the near term.
By contrast, the 10-year deficit would be more than three times that amount if all the Bush tax cuts were extended and all other fiscal cliff measures were canceled.
The legislation, which is now under consideration in the House, would avert much of the fiscal cliff's negative near-term economic impact by extending the Bush tax cuts for the majority of Americans, protecting the middle class from having to pay the Alternative Minimum Tax and retaining a number of tax breaks for businesses and individuals.
The bill also would extend long-term unemployment benefits that were set to expire and avert a scheduled pay cut to Medicare doctors, among other spending provisions.
As a result, the CBO estimates that the bill would reduce revenues over 10 years by $3.64 trillion and increase spending by $332 billion.
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