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How Far Over The 'fiscal Cliff' Could They Go?

So far, Boehner said, "we're nowhere."

If compromise were easy for this bunch, they wouldn't be in this jam. A good chunk of the fiscal cliff â¿¿ the automatic spending cuts known as the "sequester" â¿¿ is an artificial deadline created by Congress in hopes of forcing itself to come up with a deficit-cutting plan. It arrives at the same time as the expiration of the George W. Bush-era income tax cuts and other temporary tax breaks scheduled to end unless Congress extends them. Together the taxes and cuts would equal close to $700 billion in deficit reduction over 2013.

Congress could vote to override all this and essentially freeze taxes and spending where they are now while the economy heals. But Obama and lawmakers, especially Republicans bent on budget-cutting, see the fiscal cliff as the critical moment to overcome inertia on the nation's long-term debt crisis.

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JANUARY

If there's no deal in December, the economy won't fall off a cliff on New Year's Day. But it probably will begin a bumpy downhill ride.

The new Congress that convenes Jan. 3 won't look much different from the one that's deadlocked now, divided between a Republican-controlled House and a Democratic-dominated Senate. The lawmakers would feel more heat, however.

Higher taxes for nearly everyone and across-the-board spending cuts would already be law.

"People will get more nervous day by day," said Mark Zandi, chief economist at Moody's Analytics. Still, he thinks the economy could weather a few more weeks of uncertainty as long as negotiators appeared to be working toward an agreement.

If the Bush-era tax cuts expired, that would raise income taxes for the average middle-class family by $2,200 over the course of 2013, the White House says. That's about $42 per week, probably not enough to curtail spending right away and deal an immediate blow to the economy, economists say.

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