Local expert explains 'fiscal cliff'

Published On: Nov 09 2012 08:44:34 PM EST

JACKSONVILLE, Fla. -

Even before Election Day, everyone from economists to political junkies have been warning America about the potential fiscal cliff come January 1st.

The cliff essentially refers to two things that happen at the end of the year. First, tax cuts expire December 31st. One day later, automatic federal spending cuts are poised to take effect.

That's one reason President Barack Obama is pushing for a tax increase of Americans who make more than $250,000 a year.

Many economists are forecasting another recession if the president and Republicans in the House of Representatives can't agree upon a compromise.

Mr. Obama made his case Friday for the tax hike on the wealthiest Americans.

"If we're serious about reducing the deficit, we have to combine spending cuts with revenue," said Obama. "And that means asking the wealthiest Americans to pay a little more in taxes."

Joe Krier at Krier Wealth Management said people will likely notice the fiscal cliff in their paychecks.

"Instantaneously, one thing you'd notice is your paycheck is going to be smaller and that's probably going to happen unless you get a nice raise at the end of the year," said Krier.

Krier said the tax cuts were put in place by the Obama administration but they were temporary and just happen to be expiring at the same time spending cuts will take effect.

"It was part of the recovery from the banking crisis and real estate bubble," said Krier. "They were put in there in 2008 and 2009 to jump start the economy."

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