What the Fiscal Cliff May Mean for You
By: Rebecca Jeffrey
Updated: December 10, 2012
"I think that there will be a compromise but I don't think it will be the answer that we're looking for," Dr. Robert Stapp, Clinical Professor of Economics at the University of Arkansas said.
The revenue from our taxes in the United States is not covering our spending according to Stapp.
How do we fix it?
"We have to get more tax revenue and we have to get spending under control," Stapp said.
Bush tax breaks will expire December 31, and without a compromise in Washington -- taxes will increase across the board.
Those changes will take a chunk out of everyone's paycheck, pushing the economy and families to the edge of the fiscal cliff.
But Dr. Stapp said even the best solution involves risk.
"If we do strike a deal to avoid the fiscal cliff we can basically reduce our budget deficit by 50 percent but, we could also see ourselves go into a recession."
Here's how it breaks down: according to the US Census, the median income in Arkansas is 40,149 dollars. For a family of three, the take home pay would go from about 37,000 dollars to about 35,000 dollars. Which equals about $160 dollars a month out of paychecks.
"Eventually this is like 2,000 dollars a year and what we might call middle income people as much as 3,000 to 3,500 dollars and that's a significant amount of money."
Stapp believes that kind of cash out of our pockets can damage the local and national economy.
"When we have deterioration of our domestic households ability to spend, or the amount that they wind up spending, then our economy is substantially hurt."
But he does think a decision will be made just in time to keep us from falling off the fiscal cliff. The solution however, might not last.
"I think that I could see a patchwork type of situation to where there's specific spending cuts targeted certain areas, not across the board and that there would be certain taxes that would be allowed to be raised," Stapp said.
The revenue from our taxes in the United States is not covering our spending according to Stapp.
How do we fix it?
"We have to get more tax revenue and we have to get spending under control," Stapp said.
Bush tax breaks will expire December 31, and without a compromise in Washington -- taxes will increase across the board.
Those changes will take a chunk out of everyone's paycheck, pushing the economy and families to the edge of the fiscal cliff.
But Dr. Stapp said even the best solution involves risk.
"If we do strike a deal to avoid the fiscal cliff we can basically reduce our budget deficit by 50 percent but, we could also see ourselves go into a recession."
Here's how it breaks down: according to the US Census, the median income in Arkansas is 40,149 dollars. For a family of three, the take home pay would go from about 37,000 dollars to about 35,000 dollars. Which equals about $160 dollars a month out of paychecks.
"Eventually this is like 2,000 dollars a year and what we might call middle income people as much as 3,000 to 3,500 dollars and that's a significant amount of money."
Stapp believes that kind of cash out of our pockets can damage the local and national economy.
"When we have deterioration of our domestic households ability to spend, or the amount that they wind up spending, then our economy is substantially hurt."
But he does think a decision will be made just in time to keep us from falling off the fiscal cliff. The solution however, might not last.
"I think that I could see a patchwork type of situation to where there's specific spending cuts targeted certain areas, not across the board and that there would be certain taxes that would be allowed to be raised," Stapp said.
