Your first paycheck of 2013 will be light - FOX13 News, WHBQ FOX 13

Your first paycheck of 2013 will be light

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MEMPHIS, Tenn. (FOX13) -

This time of year is usually filled with optimism and hope as a new year begins.

But thanks to the politicians in Washington, D.C., who either can't figure out how to keep us from falling off the fiscal cliff or for some reason want us to fall, that optimism has turned into a sense of financial foreboding and doom that we haven't felt since the recession first hit in 2008.

At exactly midnight on New Years, Beale Street will be packed with people celebrating the new year just like so many others across the nation. But hey have not figured out that their paycheck is going to be a little short starting Jan. 1.

If the Fiscal Cliff is not resolved, your first  paycheck of 2013 will be 2 percent less that their last check. Social Security will return to its former level of 6.2 percent, which was cut to just 4.2 percent back in 2010.

In addition, federal income tax withholding on wages will increase corresponding to an increase in individual federal income tax rates.

That's the Bush Era tax cuts you keep hearing about. Add it all up and it spells pay cut for millions of average Americans, most of whom say they have already cut as far as they can cut.

'We really don't need them to do this because we're already slow down here on Beale Street," said Teresa Washington. "So we're barely making it. You know so, not a good idea."

Sure anything could happen. Congress could pass legislation that would leave the withholding tax where it is, as well as the Bush Era tax cuts. But then they can't even agree on weather or not the entire country should fall off the Fiscal Cliff, but try as we might we cant run away from it.

So do you give up the burger you love for the burger you can afford? Do you forget about that trip to the day spa once a month, and fix your own hair? Do you say goodbye to that cup of coffee you love in the morning? Find a cheaper car?

What do you do?

"Two percent, it does not sound like a lot," said Jacinda Johnson. "But then, when you look at the fact that I don't have cable, I don't have Internet, I don't have an iPhone, I got a 10-year-old car. The fact that I'm living within my means is going to be a punishment when you take 2 percent out. That will be the difference between having chicken twice a week to once a week. That's a big bite."

The good news is, the economy seems to be picking up steam. The question is, will a tax increase put the brakes on this economic train before it gets out of the station?

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