By CONNIE CASS
WASHINGTON (AP) â¿¿ The Senate on Tuesday approved a bill to prevent the nation from going over a Jan. 1 "fiscal cliff." The legislation is now in the hands of the House, which is expected to vote on it Tuesday or Wednesday; if the House approves, it would go to the White House for President Barack Obama's signature.
A look at why it's so hard for Republicans and Democrats to compromise on urgent matters of taxes and spending, and what happens if they fail:
NEW YEAR'S HEADACHE
Partly by fate, partly by design, some scary fiscal forces are coming together at the start of 2013 unless Congress and Obama act to stop them. They include:
â¿¿ Some $536 billion in tax increases, touching nearly all Americans, because various federal tax cuts and breaks expired at year's end. The bulk of those are increases the Senate-passed bill is designed to avert.
â¿¿ About $110 billion in spending cuts divided equally between the military and most other federal departments. That's about 8 percent of their annual budgets, 9 percent for the Pentagon.
Hitting the national economy with that double whammy of tax increases and spending cuts is what's called going over the "fiscal cliff." If allowed to unfold over 2013, it would lead to recession, a big jump in unemployment and financial market turmoil, economists predict. Which makes the pending House vote so crucial.
WHAT IF THEY MISS THE DEADLINE?
Even if the House rejects the Senate bill, the nation shouldn't plunge onto the shoals of recession immediately. There still might be time to engineer a soft landing.
So long as lawmakers and the president appear to be working toward agreement, the tax hikes and spending cuts could mostly be held at bay for a few weeks. Then they could be repealed retroactively once a deal was reached.