Jan 1, 2013 7:02 PM by Erin Steuber

The Fiscal Cliff: What Does It Mean for You?

Early this morning, the Senate passed a bill to avoid going over the fiscal cliff, now the house will  have its say. President Obama and Congressional leaders have talked for weeks about this financial fiasco, making it clear going over the cliff would very bad for America. But what does this all mean? And what does it mean for you?

David Baker of Lafayette say's he's disappointed with what Congress has done so far.

"Basically I think we've elected these Representatives and Senators to get this done way before now, and they haven't," said Baker.

Last year, Congress set themselves a deadline, of midnight Monday night, to pass legislation to keep certain parts of the Bush Administration tax cuts in place. That deadline passed, but after a quick overnight debate, the senate passed a bill to reverse the fiscal cliff. Now the big question, can it pass in the House?

"Politics as usual. It's going to happen when agendas get together, everybody gets their agenda filled and we'll end up with the leftovers," said Nick Colletti of Lafayette.

The "cliff" is not one thing, but a group of expiring economic provisions. They fall into two categories, taxes and spending. Falling over the cliff would potentially mean another recession, and spike in unemployment.

"(We're) not going on the cliff, now they've made a deal," said KATC Political Analyst Pearson Cross. "That gives everyone confidence. The stock market is doing better, and the chances are the economy will not have a huge jolt in the wrong direction."

The bill, if it passes, would extend tax cuts for all workers earning under $400,000. It would prevent a big tax hike on estates valued at less than $5 million. It would extend unemployment benefits, set to expire now, for some two million people on long-term unemployment for the next year. And it would postpone any spending cuts for two months.

"Voters went to the polls and essentially selected the same problems they had last time around, so we have divided government," said Cross. "We're going to be struggling with this. This is going to constitute a significant portion of Obama's first two years."

Technically everybody's taxes have already gone up, because the Bush tax cuts have expired. But if the bill can pass in the Hous, in the next day or two, the tax cuts can be made retroactive. Cross says last night's decision is the first step towards getting the national budget sheet balanced.



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