BOSTON (CBS) – It’s the biggest financial challenge to the country since the Wall Street meltdown four years ago.
The so-called “fiscal cliff” is a massive combination of tax increases and service cuts set to kick in January 1, 2013. That’s unless Congress and the president can come to a compromise.
Every American will be affected by this perfect storm of tax increases and federal cuts, all coming at the same time.
Here’s how it breaks down:
- Bush Tax Cuts
The biggest part is the tax increases. The Bush-era tax cuts expire – that’s $174 billion.
- Social Security Payroll Deduction
The next biggest chunk is an end to the Social Security Payroll Deduction, which takes another $100 billion out of our pockets.
But that’s just the first piece of it.
- Service Cuts
There are $105 billion of across-the-board service cuts on tap – including money for student loans, health care, and defense.
- Long Term Unemployment
Long term unemployment benefits will come to an end, for a savings of $58 billion.
- $600 Billion
Add the increases and the cuts and the total shock to the economy is almost $600 billion.
It would almost guarantee another recession, according to Tesoro, who says we got into this mess because our deficit is spiraling out of control – with 60-percent of our spending on entitlements like Social Security, Medicaid and Medicare.
Too many politicians also refuse to compromise.
“That’s the piece that worries me the most,” Tesoro said, “that the politicians are not going to be able to put the politics aside and do what’s right for the country.”
CBSBoston.com will have an expert on call for a live Q&A Monday through Friday from 5:30 – 6:30 p.m. to answer your questions about the fiscal cliff.
The series “Inside the Fiscal Cliff” airs all week at 5 and 11 p.m. on WBZ-TV and at 5:55 a.m., 8:55 a.m., 12:21 p.m., and 4:55 p.m. on WBZ NewsRadio 1030.