With cliff approaching, fiscal future in doubt

By Eric

CHARLESTON, SC (WCIV) -- The latest word out of Washington Monday night is there will be no vote on the fiscal cliff before midnight. This news came after a deal was said to be "close" this afternoon by the president.

The fiscal cliff was put in place as a deterrent to heavy spending and political stalemate, though it's now a near reality.

"Our government is spending a lot more than it's taking in. It's spending about 25 percent of the GNP, and taking in 15 percent," said Bill Prewitt, a certified financial planner with Charleston Financial Advisors.

Prewitt says regardless of what Washington decides by midnight, the public will one day have to pay up.

"That 10 percent is what we're borrowing, and someone has to eventually pay back the piper," Prewitt said.

Talk of a deal Monday outlined tax increases for those making over $400,000 annually.

Estate taxes could also rise while unemployment benefits appear to be extending. President Barack Obama appeared hopeful during a short address on the negotiations.

"Our most immediate priority is to stop taxes going up for middle class families starting tomorrow, I think that is a modest goal we can accomplish," he said.

What's still not settled, the guarantee of $110 billion in spending cuts that, if not made now, Prewitt says will eventually have to be implemented.

"I think spending is the real issue and trying to shove tax rates to one sector or another isn't really going to solve the problem, everyone is going to have to pay," said Prewitt.

But if no deal is reached, Uncle Sam could be asking for your money in a hurry.{}Prewitt advises his clients to diversify their assets as widely as possible.

Monday, Congress was not expected to take a final vote on a fiscal cliff agreement.