(CBS News) Monday marks the first day of the federal government's new fiscal year, but there is not much to celebrate because we are headed toward what's being called a fiscal cliff.
There were dire new warnings Monday about what will happen to American families unless Congress and the president reach a budget deal by December 31. That is the day that several tax cuts will expire, and big cuts in federal spending will take hold.
Tax experts said 90 percent of American families are facing what they will call "unprecedented tax increases."
According to the non-partisan Tax Policy Center, the U.S. is on the threshold of one of the largest tax increases in history, a tax hike that could average $3,500 for every American household.
Without actions from Congress, the report says taxes will go up next year by 20 percent, or $536 billion overall. It will hit Americans at every income level including those living below the poverty line. For a middle income family making $40,000 per year, the tax increase is $2,000.
The increases are so large because the nation's biggest tax cuts all expire three months from now on New Year's Day. They include the Bush-era federal income tax cuts, the payroll tax cut that lowered Social Security and Medicare taxes, and several remaining stimulus tax cuts. They all go away January 1 unless Congress and the president reach a deal on the budget.
Many economists are concerned that a tax increase of that size will shock the economy and trigger a recession by reducing the cash taxpayers have to spend. But now, Congress and the president have a firm price tag on what it costs if they don't reach a budget deal after the election.
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