DENVER (CBS4) – There was a last-ditch effort on Friday in Washington to avoid going over the fiscal cliff. President Barack Obama wrapped up what he called a “constructive” meeting with lawmakers.
“Nobody is going to get 100 percent of what they want, but let’s make sure that middle class families and the American economy, and in fact the world economy aren’t adversely impacted because people can’t get their jobs done,” Obama said.
It was the first time since mid-November the president had all four congressional leaders in the same room. He says now it’s up to Sens. Harry Reid and Mitch McConnell to discuss an agreement.
If there isn’t an agreement by Jan. 1 every American will pay higher taxes and could feel the pain as soon as their next paycheck. Automatic spending cuts and tax increases would start on Tuesday. That could mean smaller paychecks for every American.
Financial planners say going over the fiscal cliff will shock the progress of the economy recovery immediately.
“If we don’t feel wealthy, if we feel as we’re not doing well, and then our paychecks actually start reflecting that, I think there’s a chance that could affect consumer spending,” financial analyst Andrea Blackwelder said.
Taxes will jump noticeably. Lower middle earners between $20,000 and $50,000 a year would see taxes go up $1,400. Upper-middle earners between $50,000 and $100,000 would pay more than $3,000 in new taxes. It’s a reset to tax numbers under the Clinton administration, but analysts say those numbers that brought the largest economic surplus would be crushing now.
“We were in a very healthy economic cycle at that point and … we’re still recovering,” Blackwelder said. “We’re not batting 1,000.”
The fallout from falling off the cliff would skyrocket prices on groceries. Dairy producers say the price of milk could double — a gallon could cost nearly $8. The housing market, a key component to the 2008 economic crash, could rupture again with failing consumer confidence and a potential rise in foreclosures.
More than two million Americans on unemployment would lose their benefits by next weekend. Jobless numbers are also expected to go up. It’s a recipe for a double-dip recession, but financial planners hope cooler heads will prevail if last-minute negotiations do not.
“We think eventually they’ll go back and get these things worked out and we’ll see some retroactive action,” Blackwelder said.
The price of doing nothing will be high. It keeps both sides from achieving campaign goals of their own. It would mean $1.2 trillion in federal cuts over the next 10 years that would mandate cuts to defense, but it would also mean cuts to education and public health.