Fiscal Cliff plunge would cost everyone big bucks - WQOW TV: Eau Claire, WI NEWS18 News, Weather, and Sports

Fiscal Cliff plunge would cost everyone big bucks

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MADISON (WKOW) -- With just over four days left in the year, Democrats and Republicans are no closer to preventing the United States from going over the fiscal cliff.

And their inability to cut a deal could cost you thousands of dollars.

But, UW Political Science Professor David Canon is an optimist when it comes to Congress reaching some sort of deal.

"I think that something will happen pretty quickly in January if I had to guess right now," said Canon.

That's because if nothing is done, the Bush Era tax cuts expire for everyone, as does the payroll tax holiday President Obama initiated as part of the stimulus plan.

"Yeah, I think at that point, when people start to see their paychecks getting smaller because more money's being withheld, I think there'll be enough pressure on Washington at least to deal with that tax side and there's where I think we would get action fairly quickly to say, 'look we've got to take care of this,'" said Canon.

Canon believes the outcry that would result would be too much for Congress to ignore and that they would have to reinstate the tax cuts retroactive to January 1, 2013.

But he cautions that a larger deal may not happen for months.

"The tougher part of it is that's gonna take some time is on the budget cutting side.  Because there you've got entitlement reform that's gonna be at the core of that, you know what do we do with Social Security and Medicare, how much are we going to deal with discretionary spending, that's gonna be more difficult to deal with," said Canon.

Even if some compromise on spending is achieved it won't slash the nation's $16 trillion deficit, but will hopefully stabilize it.

"Putting us on a path that will hold down the budget deficit and then as the economy grows, that gets to be a smaller and smaller percentage of the size of our economy, and then at that point the deficit is more sustainable," said Canon.

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