If you haven't noticed there is more politicking than progress in Washington, D.C. these days. And experts say that could cost us all come December 31st. If Congress is unable to come to a compromise on tax increases and on government spending by then, an automatic tax hike will hit us all. Automatic cuts will also go into effect for defense, Social Security and Medicare. It was pretty much the last time Congress agreed on anything, and it was to put their own feet to the fire. And those cuts in Washington will trickle down to the states.
"If Washington is scrambling to cut every discretionary dime, you can bet they will cut funding to the states," said Dr. Elliot Parker an economist at UNR. "State, county and city governments will see cuts. Construction programs that get matching federal funds will go away. Even universities will be impacted. There are a lot of researchers on federal grants and those won't be coming in any more. And that will impact communities."
And while this 'fiscal cliff' sounds ominous, Parker says it's not as frightening as last summer's brush with nearly defaulting on our federal debt.
"That would have been disastrous," he says. "This is not really a cliff, it's more like a steep ski slope. We most likely will head down it at the end of December but there will be opportunities to change our course and to slow down our descent. And I think Congress will see they have to."
That of course will be after the presidential election is over. But Parker says once that's over the game will change. Lawmakers will no longer see a stalemate as the answer. After the tax cuts expire and taxes go up for everyone, lawmakers will want to seize credit for being the ones to agree and get bills passed to cut them.
Written by Erin Breen
