Fiscal Cliff and You: How a Squabble in Washington is Felt in the Valley
If Congress does not reach an agreement before December 31st at midnight, a set of deep automatic cuts goes into effect, which economists say could mean bad things for your wallet.
"Our worst case scenario is that we go into a deep recession," said Gary Palmer, President of Alabama Policy Institute.
The fiscal cliff, or Budget Control Act of 2011, would mean immediate tax increases and spending cuts next year. Some of those major cuts would hit the defense budget and Medicare.
For Huntsville, cuts to the defense budget mean cuts to retail spending and the local economy, which could affect all aspects of the economy.
"You are going to have fewer people buying cars and maybe buying homes. There will be people, because they have lost their job, particularly in the defense industry, that will have to relocate," Palmer said.
The way things are, Congress has essentially four choices; let the fiscal cliff hit on January 1st, cancel the pending cuts which could increase the debt, reach a compromise or use measures to delay a permanent policy change.