Looming Fiscal Cliff May Push Michigan into Recession

1465

LANSING — With less than a month to act, the U.S. faces a real risk of going over the “fiscal cliff” – a dangerous combination of spending cuts and tax expirations scheduled to hit on January 1 unless Congress and the White House take action. The Congressional Budget Office predicts that the cliff could push the country back into a recession. In Michigan, up to 31,000 jobs would be lost if we go over the cliff, according to an analysis by George Mason University, and experts warn local economies could bear the brunt of losses.

“If you listen to individuals across Michigan and across the country, most are willing to make reasonable and thoughtful compromises to help the country avert the fiscal cliff and get its fiscal footing,” said Ken Sikkema, former senate majority leader and Steering Committee co-chair.  “But folks are skeptical that Congress and the White House are ready to take the same approach. We need leaders in Washington to reinstate some faith in the system by showing they can work together on real solutions.”

If lawmakers fail to avert the fiscal cliff, 18 percent of the federal money that is sent to the states will be eliminated. Those cuts will reduce funding for important local programs including education, housing, and low-income initiatives. Curtailments of federal grants will cut out 6.7 percent of all revenue Michigan receives on an annual basis, according to the Pew Center on the States, much of which has already been allocated into the state’s future spending plans. The combination of tax hikes and nearly across-the-board federal spending cuts would have profoundly negative effects on working families, funding for K-12 and higher education, and small businesses and major employers alike.

“Michigan small businesses, like millions across the country, are hurting as a result of the fiscal cliff standoff in Washington. The uncertainty of what kind of business environment we’ll face in in a few weeks, and even further down the road, has businesses delaying plans to invest and grow. And as a result, the economy isn’t growing like it should. The ball is with Congress and the White House to make the first step to bolster recovery,” said Rob Fowler president & CEO, Small Business Association of Michigan.

Already, uncertainty around the fiscal cliff is affecting financial markets. A national survey by the National Association for Business Economists found 87 percent of respondents believe economic uncertainty is holding back the economy. Unfortunately, gridlock in Washington is threatening to push the country over cliff as the January 1 deadline looms.

Americans have expressed a desire for lawmakers in Washington to work together on comprehensive debt reduction legislation. A Gallup poll in December found 62 percent of Americans want government leaders to work on bipartisan solutions.

The Campaign to Fix the Debt is a nonpartisan coalition with more than 315,000 members active across 17 states. Members come from a broad range of social, economic, and political backgrounds. The Campaign supports a debt reduction framework that produces greater tax revenue, cuts wasteful spending, and improves important social programs, all while aimed at putting the long-term debt on a path of gradual reduction.

Facebook Comments