The vast majority of Americans will never have to pay the top tax rates at the center of a political tug-of-war, but we will be paying if hardened stances result in the nation going over the "fiscal cliff."
The costs include having the employee portion of the payroll tax used to fund Social Security rise back to 6.2 percent.
It was lowered to 4.2 percent two years ago in an effort to stimulate the economy. Going back to the higher rate will cost a worker making $50,000 a year $1,000 in take-home pay.
In addition, a variety of other tax cuts and credits are set to expire on Jan. 1, and more than $900 million in spending cuts are to be imposed. The state is estimating that an 8 percent across-the-board cut in federal spending will mean Pennsylvania will receive about $300 million less next year.
All of this is becoming increasingly likely.
Treasury Secretary Timothy Geithner said Wednesday that the Obama administration "absolutely" is ready to allow automatic tax hikes and across the board spending cuts unless Congress agrees to raise the tax rates on the top 2 percent of earners.
In an interview on CNBC, Geithner said, "There's no prospect in an agreement that doesn't involve those rates going up on the top 2 percent of the wealthiest Americans."
Republicans have said they are willing to limit deductions and close loopholes so that top earners wind up paying more but are refusing to raise tax rates.
Opponents of proposals to raise tax rates argue that it won't result in increased dollars coming in, might stall business investment and expansion and will encourage wealthier individuals to move their money into investments that would result in lower tax rates.
Geithner also said the administration would reject a plan that didn't also include an increase in the debt ceiling. The nation is expected to reach the current $16.4 trillion debt ceiling in mid-February, USA Today reports. President Barack Obama wants Congress to give up its authority to have to approve increases in the debt ceiling, an idea Republicans are rejecting - as they should.
We understand that debt ceiling debates have become increasingly disruptive, but they do serve a point by focusing public attention on the level of borrowing and its cost on future generations. That's something that gets too little daily attention from the public and our elected officials.
At some point all of this money has to be paid back; we can't borrow forever and expect future generations will magically come up with a way to pay the debt off.
We hope all of the strident talk is just posturing for the cameras because our nation needs a solution to the fiscal cliff scenario, which some economists warn could put the economy back into a recession.
But if the president continues to refuse to budge at all and Republicans stand firm on tax rates, Americans will be paying more than just holiday bills come January.