The President touched on a timely issue facing most Americans in his national news conference, Wednesday.
"Middle-class families are all going to end up having a big tax hike. And that's going to be a pretty rude shock for them and I suspect will have a big impact on the holiday shopping season," President Barack Obama said.
If the President and Congress can't reach a deal, billions of dollars in automatic spending cuts and tax increases will go into effect January 1.
That could change the way we think about spending this holiday season.
While some say the 'fiscal cliff' and a tax increase is inevitable, others may be wondering how it will affect them short-term. Augustana College Professor Dr. Robert Wright weighs in on the effects as soon as this holiday season.
"If people are rational, they're looking forward to what's going to happen, they could possibly cut back on their spending because they don't know what's going to happen in January. Most consumers don't seem to think that far ahead," Dr. Robert Wright said.
The fiscal cliff term refers to the combination of tax increases and $1.2 trillion in spending cuts that are set to go into effect if the deal isn't reached.
What does it mean for you? $7 trillion worth of automatic spending cuts over a decade, higher taxes for Americans and a return of another recession.
On Facebook, we asked you about the fiscal cliff and its effects on you this holiday season.
Patti said: "Certainly will affect things. Being one of the millions unemployed will have a seriously profound, worse effect."
Jim said: "If Congress doesn't get something figured out, I don't expect to have a Christmas in the foreseeable future. Barely had one last year."
Unless people do spend less this season ahead of a tax increase, Dr. Wright predicts the worse is yet to come.
"Next season, if this fiscal cliff causes the economy to slip back into a recession, we could have a weak 2013 season if unemployment goes up and income goes down," Dr. Wright said.
The fear is middle class families would pay an average of $2,000 more next year, if a compromise isn't reached.
