Washington Hints at Taking the Fiscal Cliff Dive

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With just four weeks to go until the country hits the so-called "fiscal cliff" on Jan. 1., the showdown over taxes and spending is heating up as Democrats and Republicans show signs they may drive right over it.

"I think we're going over the cliff. It's pretty clear to me they've made a political calculation," Sen. Lindsay Graham, R-S.C., said.

There's now worry in Washington that the fiscal cliff negotiations could fail and take the country for an economic dive.

What that would mean: a $2,200 to $2,400 tax increase for the average family and a 2 percent payroll tax cut that would disappear.

It would also mean $250 billion in Pentagon cuts and $250 billion in cuts to education, transportation, and food safety research.

A major sticking point is the president's insistence that tax cuts for the wealthiest 2 percent be allowed to expire.

"There is no responsible way we can govern this country with those low rates in place for future generations," Treasury Secretary Timothy Geithner said Sunday. "Those rates are going to have to go up."

Another point of contention, the president wants $1.6 trillion in new tax revenue over the next 10 years. Speaker of the House John Boehner, R-Ohio, wants half that.

On Fox News Sunday, Boehner shot down the president's plan.

"A non-serious proposal. The president is asking for $1.6 trillion worth of new revenue over 10 years, twice as much as he has been asking for in public," he said. "He has stimulus spending in here that exceeded the amount of new cuts that he was willing to consider. It was not a serious offer."

Economists say if Washington can't reach a deal on this one, the U.S. economy will fall back into recession and the unemployment rate will go up.

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