So what exactly is the fiscal cliff?
Updated On: Dec 12 2012 09:05:47 PM MST
The term fiscal cliff sounds ominous. Like debt ceiling and recession, but what exactly does it mean?
It's the term given to the financial situation the country faces January 1st, 2013, if nothing is done about expiring Bush-era tax cuts, and broad budget cuts planned as part of the Budget Control Act of 2011, that ended last summer debt ceiling crisis.
Four-fifths of the cliff involve tax increases that will come from expiring income tax cuts from 2001, 2003 and credits from the 2009 stimulus package plus 2 percentage point cut to social security tax breaks, that all expire January 1.
The nonpartisan Tax Policy Center estimates roughly 90 percent of households would pay more in taxes going forward and says going over the fiscal cliff would cost middle income households, on average about $2,000 more a year. 80 bucks per pay period. Roughly the equivalent of 500 gallons of milk.
While Republicans and Democrats spar in Washington, the bottom line for most Americans is compromise.
"It should be resolved. I know it can be resolved. somebody's gonna have to give," says one Missoula man.
More than just middle America will feel the squeeze if nothing is done by the end of the year.
The across the board spending cuts, 8 percent on domestic spending, and 10 percent on defense spending, coupled with expiring tax cuts could end up costing the country $670 billion.