How the "financial cliff" would impact Iowans - KWWL - Eastern Iowa Breaking News, Weather, Closings

How the "financial cliff" would impact Iowans

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WATERLOO (KWWL) -

The President addressed a so-called "fiscal cliff" looming at the end of the year at a press conference Friday. If Congress does not reach a budget agreement and find a way to cut the nation's debt, automatic budget cuts and tax hikes will go into effect January 1, 2013.

President Barack Obama said he will meet with leaders from both parties at the White House next week. He said he's committed to working with Congress to avoid the fiscal cliff, and open to compromise and new ideas. But if lawmakers can't reach a deal, it's main street America that will feel the impact.

A few weeks ago, Kristina Bergman accepted the role of general manager at a popular Waterloo restaurant.

"It's been fun. Interesting, a lot to learn," she said.

Bergman is learning how to balance the diner's customers and the books. Meanwhile, the concept of sinking back into a recession is on the back of her mind.

"I am a little bit concerned as to how it will impact our books and the end result," she said.

Financial experts like Dave Becker say, she has every right to be concerned. Everyone in Bergman's restaurant -- from the owners, to the workers, to the diners -- would take a hit if lawmakers don't make a change.

"Because we're kind of barely keeping our heads above water, and this would be like throwing a 50 pound milestone on it," said Becker.

Most people believe Congress will act -- it's a matter of whether legislators make a long-term or short-term fix.

"We're kind of at a fork in the road. If we get to a point where we say -- okay, we're going to start dealing with our spending problems, we're going to have a balanced budget, that's a big positive long-term. I think the economy and the market would react positively to that. If we have a situation where we continue to kick the can down the road and put a band aid on the situation, that's a big problem," said Beckman.

With the election behind us, Congress can, in theory, focus on what's best for the country -- and what's best for the folks at the corner diner. But will they?

"I would really hope so. It's not kids on a playground. They should be able to work together. Just like the rest of America has to do," said Bergman.

The President is calling for a tax increase on families making more than $250,000. In Iowa, that would directly impact fewer than 30,000 households. It could hurt many more people indirectly, as the so-called "wealthiest Americans" find ways to make up for their personal shortfall.

Becker said it's hard to put a number on exactly how much more an average family would pay if the Bush-era taxes were allowed to expire. But a non-partisan organization, Tax Foundation, came up with an estimated impact. According to that group, the average Iowan would end up paying about $1,800 more next year in taxes.

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