The Congressional Budget Office estimates the combined effect of the tax increases and spending cuts will be a $483 billion reduction in the deficit for the 2012-2013 fiscal year.
According to Ron Haskins, senior fellow of Economic Studies at the Brookings Institution, the cuts will have a real impact at the local level, with defense contracts not being honored and cutbacks in popular programs, such as Head Start, the national pre-schooling programming for low-income children.
Among the people affected could be some of the nation's most vulnerable, who rely on federal programs for assistance.
In a letter sent to Rep. Ed Markey, D-Mass., on June 29, Assistant Secretary for Financial resources Ellen Murray detailed what the cuts could mean to the Health and Human Services department.
"[Up] to 100,000 children would lose Head Start services and approximately 80,000 fewer children would receive child care assistance. In addition, approximately 12,150 fewer patients would receive benefits from our AIDS Drug Assistance Program. Approximately 169,000 fewer individuals would be admitted to substance abuse treatment programs and an estimated 14,200 fewer people who are homeless would receive assistance," she wrote.
Although Haskins supports a more rational approach to spending cuts than the ones currently in place, he says such deep and drastic measures are necessary for the nation's fiscal health.
"We spent too much money. We can't afford it and people are going to be cut back and people are going to be hurt," Haskins said. "These cuts, and more, will eventually be imposed on the American public, if not now, then later."
The political stand-off certainly means the country will continue moving closer to the cliff until the November election cycle is over, with the results of those elections likely to determine how the issue will be resolved in the lame-duck session that ends before the December holidays.