Baylor professor explains
UPDATED: Wednesday, December 12, 2012 - 10:20am
Waco, TX — The Fiscal Cliff.
It's a term you've surely heard over the past month.
It's on the radio and on your television.
But what is it?
And more importantly, how will it affect you?
"The fiscal cliff is two things: One, automatic spending cuts, and two, tax increases," said Pat Flavin, a political science professor at Baylor.
Flavin explained what going over the so-called cliff will mean for your wallet.
"Next year, if no deal is done, everybody will pay higher taxes," said Flavin.
"So every time you look at your paycheck and you see what's taken out for social security- That's actually been reduced for the past couple of years- are going back to normal. Thich basically means that everybody is going to get a two-percent pay cut starting January first."
The timing of all this uncertainty could hurt retail this holiday season and into early next year.
"Instead of that two percent to have that money to go buy a new TV, that money is going to be going to Uncle Sam," said Flavin.
Pat suggests going over the cliff could set the economy back.
The lack of a deal could also hurt the country's credit rating, which may reduce confidence overseas.