Fiscal Cliff Update
As you are most likely aware, unless Congress acts soon, at midnight on December 31, 2012, a disastrous combination of tax hikes and spending cuts–known as the Fiscal Cliff–will automatically take effect, threatening to plunge our economy back into recession and would equal the largest tax increase in American history. The American Action Forum predicts we could lose between 2.9 and 10 million jobs nationwide should this take place. According to the non-partisan Congressional Budget Office, confirms that it could cause unemployment to jump up to 9.1%. We encourage our membership to take action on this very important topic.
- Keep informed– visit www.pwchamberadvocate.org and other sources for updates
- Share information with colleagues, friends and family
- Tell Congress that swift action is needed to prevent the Fiscal Cliff
Following are some additional updates and projections:
- In Virginia, the impact of the fiscal cliff will be felt more strongly than in any other state. Due to our close economic ties to federal spending, in many ways we are already feeling and seeing the effects of impending sequestration. Global markets are expressing concern over the uncertainty and potential impact of massive tax increases and spending cuts. As a result, companies and investors are holding back. Our small businesses, which constitute the overwhelming majority of the Prince William Chamber membership, are especially worried. Not only are they facing the prospect of higher personal taxes and fiscal uncertainty, they must prepare to pay for a number of regulations and mandates that are in the federal pipeline. Those firms that deal with the federal government, either as defense contractors or suppliers, have been feeling the contraction and constriction for months in the form of lost contracts and late payments.
- The uncertainty over the Fiscal Cliff is clouding state budgeting. The impact of potential federal spending cuts, especially in defense, is the greatest uncertainty facing state lawmakers as they prepare to revise Virginia’s two-year, $85 billion budget in the upcoming General Assembly session. Our economy relies heavily on federal procurement and defense spending, and on taxable wages earned by federal workers. The House Appropriations staff cited an economic study showing the state could lose more than 82,000 jobs in two-years under a “worst case scenario” if the federal cuts are imposed. Earlier this month, Governor McDonald directed state agencies to prepare four-percent budget reduction plans, citing uncertainties caused by the federal fiscal cliff, rising health care costs and continued economic sluggishness. The Governor will present his budget proposal to the General Assembly on Dec 17, well before any “deal” in Congress is likely to develop.
- Part of the solution must include restructuring our nation’s entitlement programs—Medicare, Medicaid and Social Security. These valued and important programs must be put on a sustainable financial path. Last week, the Prince William Chamber joined hundreds of business organizations and chambers of commerce around the country in urging Congress and the President work together on solutions to this problem.
- Watch this US Chamber video that explains the fiscal cliff and the problems that will arise if it is not addressed. Share it with others and urge them to contact their members of Congress on this critical matter. [youtube id=”d2b7HXOvZLY” width=”620″ height=”360″]
The President and the outgoing Congress must work immediately – this year – to prevent the fiscal cliff and lay the groundwork for solution to restore our nation’s long term fiscal balance. As a business leader, Virginia’s Members of Congress need to hear from you. Visit the Prince William Chamber’s advocacy resource center to learn more and take action today.