Lawmakers must work to prevent U.S. from falling off "fiscal cliff"

NORTHAMPTON, Mass. (WWLP) - Automatic spending cuts and the end of a tax break could mean the loss of thousands of jobs. The looming issue is now being called a “ fiscal cliff.”

On December 31, 2012, payroll tax cuts for every American expire and automatic spending cuts will kick-in for government departments such as the Department of Defense.

Lawmakers are trying to stay away from those automatic cuts, fearing they could translate into a financial disaster.

Federal Reserve Chairman Ben Bernanke says the looming defense cuts could slash an estimated 100,000 jobs. Still, some are not upset with the prospect of reducing military spending.

“Absolutely cut, and they should cut the defense budget; the military budget. That's where the cutting needs to happen,” Abby Dolinger of Northampton said. “Not this silly, small amounts of money that are going to social programs.”

Under the automatic cuts, there will also be an $11 billion reduction in Medicare payment rates for physicians.

The Congressional Budget Office says ending tax cuts will restore $95 billion in revenue, and these types of fiscal policies could cut the $1.1 trillion dollar deficit by $607 billion.

On Friday, President Barack Obama said that he would veto any legislation that would end tax cuts for Americans making $250,000 or more per year. Republicans have fought to protect tax cuts for all income groups, saying that raising taxes on upper-income earners would prevent job creation.