If Democrats and Republicans can't forge a deal to avoid the so-called "fiscal cliff" come January, millions of Americans could be affected financially. Congressional compromise on spending and revenue would be needed before Dec. 31, or portions of 2011's Budget Control Act will kick in to help trim the deficit.
Yahoo News asked Americans this week to pick their poison. What worries them most? The end of payroll tax cuts, the further smearing of the country's reputation, another potential recession, increased unemployment or something else?
In their own words, here are excerpts from what they wrote Tuesday:
I'm not so confident Washington will work it out, and I know the consequences of a delayed reaction will have devastating effects on my family's finances.
President Obama signed a payroll tax holiday, giving the employed, self-employed, and small businesses with less than 50 employees a 2 percent increase in their net earnings. If a settlement can't be reached to avoid the fiscal cliff, the tax holiday will end, and my family will see our yearly tax deductions of at least $1,500 disappear.
For us, that is enough to pay our electricity and natural gas bill for an entire year.
President Bush implemented a number of tax cuts for American families between 2001 and 2003, which were aimed at helping families keep more of the money they earned each year. Those cuts are set to expire in 2013, as well. According to The Associated Press, families like mine could see a tax increase of nearly $3,700 a year if these tax cuts are allowed to expire. To put that loss in perspective, we budget around $3,600 a year for groceries or $300 a month, so we will lose our entire food budget, plus an additional $100 every year.
As a family, we are barely making enough to be considered middle class, so losing nearly $5,200 a year would put us into a financial free-fall that we may not be able to recover from.
-- Threesia Goff, Louisville, Ky.
I try not to think about it.
We survived the slam of 2008, but not without casualties. I lost my job as hospital massage therapist and my insurance, and at the time I was not insurable privately because I am a cancer survivor. My fiancé was employed, with benefits. We got married sooner than planned, and my family remained covered.
I am self-employed, and he is still employed as a funeral director, although the slow recovery has rendered his job less secure. We have managed with less these last few years. There is little to spare. A few setbacks could put us over the edge.
He could lose his job, and we would pay more for insurance. We would have no choice but to use COBRA, because I am not insurable privately until 2014. We would have to find a way to pay for it, because I am terrified of having my cancer recur without any health coverage. If unemployment goes up by a percentage point, as CNBC predicted in October, it could be difficult for my spouse to find a new job.
-- Elizabeth Danu, San Mateo, Calif.
The failure of government to govern is the greatest threat.
Standard and Poor's downgraded America's long term debt to AA, down from its highest rating. In theory, the cost of credit rises as the rating drops, but due to a host of other circumstances, such as the world falling apart, America's cost to borrow declined. Standard and Poor's cited, as one reason, the failure of the political entities to govern.
To me, it seems as if everyone agrees we need to get our deficit under control and that involves an increase in revenues and a reduction in expenses. I may be naïve, but I think Congress will work together this time and show willingness to work with the president. This may involve kicking the can forward for another year while addressing a major overhaul of the tax code. The New York Times reported that there are many Democrats who are in favor of comprehensive legislation that would eliminate many of the loopholes and deductions, which people enjoy/abuse, and maintain or lower the tax rates. It would be ironic if Mitt Romney's tax plan became the basis for the legislation.
-- Morris Armstrong, Danbury, Conn.
Two out of four college grads in my family need a job to pay back college loans. Therefore, slow but steady growth in the economy and upward ticks in jobs numbers, as seen in 2012, are crucial to us.
Most worrisome to me is the possibility of the nation falling back into recession and unemployment escalating due to a fall in the gross domestic product. The Congressional Budget Office, which does not usually speak to these points, has indicated this would be a very real consequence of failed negotiations. Unemployment at 9.1 percent a year from now is to be avoided no matter what side of the political fence you call home.
Consumer sentiment is up, higher than it has been in five years. We need this recovery. Wages are flat, unemployment is hovering just below 8 percent. We can see a steep, scary cliff ahead, but also where safe ground lies. Let's find a way to safe ground now.
-- Laurie Jo Miller Farr, San Francisco
My husband is a quality-control tech in the building industry. If another recession hits, customers will cut their consumption spending, and businesses will cease to expand and build. He's been told this will result in a severe decrease in my income due to the loss of business revenue his company will suffer. Based on the last recession, my husband's income will be cut by at least 30 percent or about $1,000 per month.
Both my husband and I will see a much smaller paycheck because of the increase in payroll taxes. My payroll department tells me that I may see a decrease of at least $30 per week and my husband will see about the same. Tax increases would be highest we have seen in the past 60 years. In addition, we will be hit hard by the expiration of tax credits for married couples and couples with children.
-- Sophie Walton, Greer, S.C.
Jobs are the most immediate concern for my family. While well-aware of the job crisis of the past five years, our family was spared a direct hit from the struggles. Yet, without the luxury of money in reserve, we remain in the precarious position of living paycheck to paycheck. If the economy were to slump, previously steady employers could shed jobs and our ability to maintain a home for three young children could be jeopardized.
A secondary concern of the fiscal cliff is the impact on our home state of Florida. While every state faces consequences, some would be affected worse. With higher unemployment and a continuing housing crisis, Florida clearly weathered a severe storm. Not only could recent gains be undone, but as a service-based economy, the Sunshine State could be vulnerable to recession. With potential for inflation, and the assurance of greater taxation, both travelers and investors would certainly cut expenditures, leaving Florida's economy -- and my family -- with an uncertain future.
-- Jeff Briscoe, Port Charlotte, Fla.
Many social programs would face automatic spending cuts if the BCA does go into effect.
If Medicare is altered, current beneficiaries would face immediate consequences. Middle- and lower-income individuals shouldn't have their services cut, or be asked to pay too much more for their benefits. Those forced choices would be detrimental to their health and affect their economic lives.
We must balance our view of this legitimate fiscal crisis, respect the economy and responsibly meet our debt obligations.
-- Sean O'Brien, Reading, Pa.
- Budget, Tax & Economy
- Politics & Government