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What a Fall Over ‘Fiscal Cliff” Would Mean

SPRINGFIELD, Mass. (WGGB) — Higher taxes and deep cuts in Medicare and defense. These are the things set to happen if the country goes over the so-called ‘fiscal cliff’ in a matter of weeks.

Aimed at reducing the deficit by more than half a trillion, the Budget Control Act of 2011 takes effect January 1. Taxes go up and over 7% cuts to government programs are triggered automatically, unless republicans and democrats can come up with a compromise first.

“A lot the analysts on the research side are saying it will simply lead us closer to a recession,” said Tom Manzi, Branch Manager and First Vice President for Wells Fargo Advisors.

“Most do not think, we don’t think, it’s going to happen, this fiscal cliff. We think the politicians are going to compromise and get things done by the end of the year because they have to. Nobody wants to be blamed for putting us over this fiscal cliff,” Manzi adds.

Republicans refuse to raise any taxes as part of a compromise. Democrats and President Barack Obama say, though, the wealthiest will have to pay more.

“As I’ve said before, we just can’t cut our way to prosperity,” said Obama. “If we’re serious about reducing the deficit, we have to combines spending cuts with revenue. And that means asking the wealthiest Americans to pay a little more in taxes.”

The President has invited congressional leaders to meet next week at the White House to discuss solutions to the impasse.

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