Fiscal Cliff 101: What Falling Over The Edge Could Mean For You

TRI-STATE - Congress goes on their holiday recess without a deal to avoid the looming fiscal cliff, Friday. As lawmakers leave Washington for the holidays, there is still a lot of work to be done to avoid the spending cuts and tax increases that are sure to follow.

But does the average person really know what falling off of the fiscal cliff would mean?

Most people say they've heard of the cliff on the news, but they don't know how it will impact them. So I dug for answers and, what I found, should concern everyone.

The clock is ticking for a deal to be reached before the December 31st deadline to avoid the so-called fiscal cliff.

I asked Evansville resident Josh Smith, "Do you know what the fiscal cliff is? His answer, one we heard a lot of Friday. "I've heard a little bit about it."

He knows, "It's going to cost everybody a lot more money in taxes."

And that's true. Come January first, last year's temporary payroll tax cuts will expire meaning workers could see a 2 percent increase in their tax withholdings. The Bush-era tax cuts would also end and taxes, associated with Obama-Care, would go in to affect.

Smith predicts, "I can't help but think they might get a patch done like a temporary deal to push off until they can get the bigger deal done to keep the worst-case scenario from kicking it to place while they work out the details."

That worst-case scenario could hit people hard. If a deal isn't reached, the Tax Policy Center estimates the average middle-income family would see a 2-thousand dollar tax increase next year. 3.4 million jobs could be lost and, the cliff itself could cost $671 billion dollars next year alone.

And that's not all. The IRS is warning tax payers that their refunds this tax season could be delayed if we go over the cliff. We would also see deep spending cuts in defense, Medicare and over a thousand other government programs.

Marcelino Irwin, of Evansville, says, "I think they know all of the ramification of everything they do up there. It's kind of like a small circle of guys that are, like running a business, they battle between each other and they take wins and loses like sports."

And as congress takes Christmas break, voters, like Smith, wish they would have finished the job before going on vacation.

"Of course, I want them to have their holidays too but it would have been nice if they would have used that pressure to get home to their families to get something accomplished. I guess they didn't feel the same way."

Unfortunately, with just 10 days until we reach the very edge of that cliff, there is no agreement in sight.