How to prepare for the fiscal cliff

Corporate CEO's, labor leaders, and politicians have all weighed in on the fiscal cliff. But what will the budget and tax negotiations mean to you and your wallet?

Yesterday, President Obama met with labor leaders and progressives about the looming fiscal cliff. Today Obama will talk with a dozen corporate CEOs. The back-to-back meetings are part of an effort to reach out and hear from different groups about their concerns. But, what does the fiscal cliff mean to you and your wallet? Economists agree that tax hikes and budget cuts will likely cause Americans to pull back on spending and significantly slow down the overall economy. Marketplace personal finance senior producer, Paddy Hirsch, says individuals can prepare by beefing up savings and meeting with tax advisers to figure out how tax rate changes could impact their budgets.
Need an easy explainer on the fiscal cliff? Marketplace senior producer Paddy Hirsch breaks it down with a Hollywood analogy in this Whiteboard video: The fiscal cliff explained (with help from Hollywood)

About the author

Paddy Hirsch is a Senior Editor at Marketplace and the creator and host of the Marketplace Whiteboard. Follow Paddy on Twitter @paddyhirsch and on facebook at www.facebook.com/paddyhirsch101
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In all the discussions I've heard about the fiscal cliff, I've heard nothing said about the millions of regular middle- and low-income workers (who may not be paying attention to the news) who sometime in January will get the first paycheck of the new year. When they see that their take-home pay is suddenly $20-$50 or more less per week than expected, there will be many, many very angry people out there. The leaders and the pundits and commentators can pontificate about what investors should do to prepare and how it's not as dangerous as it sounds and it's really just a slope not a cliff, but to regular folks this is a big deal.

Judging from the GOP's brilliant response to the election loss thus far -- since they lost due to the women vote, pick on several girls; Ignore Hurricane Sandy (further); Try to elevate yet another a random terrorist attack in the war-torn Mideast into "Watergate-style hearings;" Blame the president for an employee's affair the guy's wife didn't even know about (while drawing attention to a *general,* which will reflect badly on the GOP as well) -- I expect that the country will go over the so-called cliff. The GOP will be blamed for holding America hostage to benefit the top 2%, which will haunt them for years.

Then, the Democrats will introduce the very same tax cuts (minus the top 2%) and the GOP coalition will fall apart as congressmen panic over the impact of voting against tax cuts for the middle class in their home districts. Those in the GOP who refuse to vote for the tax cut will be blamed and un-elected in two years.

As a famous admiral once said, "It's a trap!"

Shame on you for your this slanted, hyperbolic, uninformative report. Your piece completely ignored the wisdom of many economists like Nobel Laureate Paul Krugman that have weighed in that the "Fiscal Cliff" is really more like a fiscal slope. This is nothing like the debt ceiling crisis in which one day later the US would default on its bonds with dire consequences for the world economy. Dec 31 can come and go with no agreement and there will likely be several weeks before the outcome has any effect on the economy. But reality is not as sexy a discussion as to what happens when we "fall off the fiscal cliff". Panic sells. So thanks for adding nothing to the discussion of how this might really affect us.

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