A decrease on government spending will cut jobs across the boards even more. Less jobs means more welfare and other benefit programs for the not so well off. Our long run aggregate demand, and supply will fall even more dramatically. This well cause a double dip recession which could be the next great depression. The time to cut spending and raise taxes is during an economic boom not a recession.
It will increase by nearly $4.6 trillion dollars to be exact over the next ten years. It could always be worse, and the fact that President Obama was able to secure the best possible deal in the face of so much opposition gives him some room to improve on that figure. The key here is the Bush-Era tax cuts. If they had expired for everyone at the end of 2012, the deficit number would be smaller. Some assert that the president isn't giving the American people the full story, but he can only do what he can do when faced with an uncompromising House.
There are some who believe that this will. But I think until we get any further down the road we will not know what this will all entail. What we do know is there will be more revenue coming in from the wealthy, and there are some in the middle class being hit.
By raising taxes on the wealthy, the fiscal cliff deal should technically help lower the deficit as it stands. However, there remains the difficulty that government is spending too much and some people think we need to cut government spending at the same time. I think Obama wants to be able to raise the debt ceiling for a period of time in order to support programs that will get our economy moving more before he starts to put more cuts into effect.
The deficit is the amount of money the government pays using credit. The so called "Fiscal Cliff" is simply the government's budget if it takes no action and allows the Bush era tax cuts to expire. That's not to say that it should happen, but based on the proposed options of both parties, the deficit will basically be the same size.