Despite all the hand-wringing and prognostications of impending "fiscal cliff" doom, the world as we know it will not come to an end after Dec. 31.
If Congress and the president do nothing, we will wake up Jan. 1 to a restoration of Clinton-era taxes no more Bush-era tax cuts that disproportionately benefit higher-income Americans; no more Obama-era tax cuts that disproportionately benefit middle- and lower-income Americans. We all go back to the taxes we were paying before 2001.
That would begin with the first paycheck in January likely mid-month or end-of-month. Think back. Were the taxes of the 1990s so horrible? A typical median-income California family of four (earning $74,100) could see taxes on their weekly paycheck rise by $42 unpleasant, to be sure, but not a catastrophe.
If Congress and the president do nothing, we also will wake up on New Year's Day with the prospect of across-the-board federal spending cuts of $98 billion to $110 billion for the fiscal year, divided equally between the military and most other federal agencies.
That's about 8 percent of their annual budgets, 9 percent for the Pentagon. Social Security, Medicaid (called Medi-Cal in California) and veterans benefits are exempt.
Budget cuts of 8 percent or 9 percent would not, of course, hit all at once on New Year's Day. But across-the-board, indiscriminate cuts are a terrible way to do business. The effects would show pretty quickly, providing some urgency for Congress to get beyond a meat-ax approach and for the American people to put pressure on lawmakers.
While a deal before Dec. 31 is preferable, a delay into January means the federal government would take in more revenues and spend less improving the nation's financial situation.
That said, the longer an impasse drags on after Jan. 1, the more likely that restored taxes and indiscriminate spending cuts would seriously hurt the nation's fragile economy. That not a Jan. 1 doomsday scenario is the real issue.
The reality is that despite improvements, we still face a big jobs hole.
While the private sector has been adding 155,000 jobs a month, on average, since the recession ended in 2010, the economy has regained only 4.6 million of the 8.7 million jobs lost. We still have 4.1 million fewer jobs than when the recession started in December 2007.
We would need to add an average of 171,000 jobs a month for the next two years to return to December 2007 levels of employment.
If Congress and the president dive off the cliff on Jan. 1, the long-term unemployed would take an immediate hit. After Dec. 31, workers who have exhausted the regular 26 weeks of unemployment benefits without finding a job no longer would get additional weeks of emergency benefits. That would affect about 400,000 Californians, according to the state Employment Development Department.
That prospect should light a fire under state and federal leaders to address long-term unemployment.
If the impasse drags on through the whole year, the Congressional Budget Office projects that the combination of across-the-board spending cuts and the less-than-ideal structure of the tax hikes will sink the nation into another recession and cause the national unemployment rate to go back up to 9 percent.
That won't happen on Jan. 1, but it provides a real incentive to act sooner rather than later to make taxes simpler and fairer and to take on cost drivers with targeted spending cuts. So while the situation certainly does not call for a shrug the R.E.M. lyric, "It's the end of the world as we know it/And I feel fine," comes to mind it is no reason to panic. We can still guardedly celebrate New Year's Eve.