(MOBILE, Ala.) As members of Congress return to Capitol Hill this week, all eyes are on fiscal cliff negotiations. We sat down with a local expert to find out what's at stake for the average family.
The term 'fiscal cliff' has been in the headlines for weeks. In short, it refers to the situation set to occur Jan. 1, 2013. That's the date multiple tax breaks are all set to expire, and several new taxes will go into effect. This, is Congress fails to come to a compromise.
"The fiscal cliff is a sort of self-inflicted wound," says Dr. Sam Fisher.
Fisher is an associate professor of political science at the University of South Alabama. He says for the average Alabamian, the biggest bite will come from the expiration of the payroll tax cut. The tax break would expire, and the average worker would lose an additional 2 percent of every paycheck to taxes. For most of us that amounts to several hundred dollars over the course of the year.
"If that money disappears, that is we impose the cuts the way they were, that money is taken out of the economy. People aren't spending it," Dr. Fisher says. "I think the biggest impact might be, it'll throw us back into a recession."
But Tuesday, as Congress returns for a lame duck session, there are the first small signs of a move toward compromise. A handful of key GOP senators and representatives have indicated they may go against an earlier pledge to vote against all tax increases of any kind.
"I'm cautiously encouraged that there's a growing sense of realization that we've got to do something to avoid the calamities that would occur if we don't do something," says Rep. Jo Bonner, R-Ala.
Bonner says he is not interested in voting for a tax increase, but he is willing to compromise in other areas.
"Republicans are willing to put revenue on the table. Democrats, if they're willing to put entitlements on the table and we can have a discussion about tax reform, then there's a way to avoid this," he says.
Dr. Fisher says avoiding the fiscal cliff is top priority; dealing with the ballooning national debt should come second.
"The big issue {blocking compromise} is over the debt," he says. "Yes, the debts a big deal, but it's really not that big of an issue right now. The bigger issue is getting our economy going."
