Crockpot: Should We Be Worried About the Fiscal Cliff?

| 10/12/2012 2:16:28 PM

Cliff JumpRecently, there’s been a lot of talk about what would happen if we reach the fiscal cliff (or slope or obstacle course) later this year. Unless Congress acts before January 2, the argument goes, large-scale automatic cuts in government spending will likely trigger a new recession, whether or not Obama is reelected. A handful of programs like Medicaid, Social Security, and SNAP, are exempt from cuts, though Medicare will take a hit. Some of the bigger cuts will be in defense, farm subsidies, and student loan assistance. If all this happens, says the CBO, look for unemployment to rise above 9 percent, and the economy to plunge into deep recession next year.   


How would sequestration affect state budgets? Check out this infographic from the Pew Research Center to find out. States are where some of the worst pain will be, says Pew’s Jake Grovum, especially in education. Oddly, while big-ticket safety net programs like Social Security and Medicaid are off-limits at the federal level, automatic cuts will slash state services like WIC, and some may cease to exist. Special education will see a $1 billion cut nationwide.


So why aren’t we more worried? Because it’s probably not gonna happen, says Mother Jones’ Kevin Drum. At least not all once. Whether or not Congress can ultimately reach a deal, the problem won’t come to a head in January. This is a “fiscal slope,” not a cliff, Drum says, and big changes like these take a lot of time. Congresspeople are great at procrastinating, but thankfully, they probably have until sometime in spring to avert disaster.


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