PITTSBURGH (KDKA) — Leaders in Washington and on Wall Street are calling it the “Fiscal Cliff,” automatic tax hikes and domestic and military spending cuts in January if Congress fails to act.

“Collectively, the tax hikes could amount to more than $500 billion. There will also be automatic spending cuts that will begin to be phased in in the next year if Congress does nothing — and those spending cuts could total more than $150 billion,” Carnegie Mellon University professor Lee Branstetter told KDKA money editor Jon Delano.

Branstetter served in the White House with the President’s Council of Economic Advisors, and he says doing nothing will throw the nation back into a deep recession.

But can a Republican House of Representatives and a Democratic Senate and President compromise to avoid that disaster?

“Mr. President, the Republican majority in the House stands ready to work with you,” said House Speaker John Boehner, an Ohio Republican.

“Compromise is not a dirty word,” added Senate Majority Leader Harry Reid, a Nevada Democrat.

But despite the sweet words, the parties are far apart.

Republicans won’t approve extending tax cuts for the middle class unless the wealthy get them too, while Democrats say the President’s re-election sent this message, says Reid, “People making all this money have to contribute a little bit more.”

Financial advisor Joe Balestrino of Federated Investors said if Congress doesn’t act, credit agencies like Moody’s have said to the U.S. Government, “You will be downgraded in 2013, and the significance of that is a lower rating means higher interest costs.”

So will both sides give a little?

“I think there is good reason to expect that both parties will find compromise here, and least we can hope so,” added Branstetter.

Let’s hope so because these tax hikes and budget cuts are not trivial.

Middle income families could be hit with a $2,000 to $3,000 tax hike, and defense spending is cut by nine percent.

So how did we get here?

Last year, Congress decided to postpone dealing with the expiration of the Bush tax cuts and their failure to balance the budget until after the election.

Well, now the election is over and it’s time to act.

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