Here’s what could happen to city services in 2013 if Congress doesn’t take action.
The problem with the fiscal cliff—well, other than the fact that most people don’t know what the hell it is—is that there is no plan to avoid falling off it—yet. What’s certain is that if nothing is done, all our taxes will go up. There will be deep cuts in government programs. Consumer spending could fall by about $200 billion nationwide. And we’d be headed toward another recession in early 2013. Happy New Year!
The fiscal cliff is the term used to describe when the Budget Control Act of 2011 goes into effect: Jan. 1. The act marks the end of the across-the-board Bush-era tax cuts, and the cutting of more than 1,000 government programs. In August of last year, Congress created a so-called super committee as part of the Budget Control Act of 2011. Their goal: Come up with a plan to lower the deficit by $1.2 trillion in 10 years. Their result: complete and total failure. And, as reward for their failure, we won a worst-case compromise consisting of massive government program cuts and massive tax hikes to coincide with costly Patient Protection and Affordable Care Act regulations, also taking effect on Jan. 1. To top it off, some worry the U.S. may reach its debt ceiling by the end of the year.
Now Democrats want to restore spending cuts and middle-class tax cuts while raising taxes on the rich. Republicans want to extend the Bush tax cuts, which make up about 40 percent of American debt, and cut entitlements. Sound familiar? It’s the same thing the parties have been arguing about since, well, forever.
So, you may be asking how all of this affects you. On Monday, Mayor Nutter provided specifics on what Philly programs would be cut, and how much: “Cuts to public health would mean that the city would clean 100 fewer homes for lead, reducing services to as many as 300 lead-poisoned children.” He added: “Eighty homeowners facing foreclosure would not get counseling, potentially adding $1.6 million to the city’s homeless system.”
That’s not all. The city could also see the cutting of 400 student slots and 30 teachers and classroom aides from the education program Head Start, and $1 million in Homeland Security funds. And Nutter says nothing can be done to deal with any of this if the Budget Control Act does go into effect. “It would be virtually impossible to … absorb the level of cuts that we’re talking about,” said the mayor, who actually brokered the only bipartisan piece of writing surrounding the ordeal: a letter from the U.S. Conference of Mayors urging a vague bipartisan resolution that (conceivably) both raises taxes on the rich and makes some spending cuts. “These are serious matters that affect cities all across the United States of America,” Nutter told CNN last month. “You cannot solely cut your way out of the amount of debt that we have, and this issue must be addressed. The most important issue is that the middle-class tax cuts should be voted on right now by the Congress.”
On the federal level, we’re looking at massive cuts to education (surprise!), police, HIV and AIDS treatment services, and more.
The situation is constantly changing, so it’s hard to foresee how such drastic cuts—paired with many Philadelphians’ water bills and property taxes already scheduled to increase in 2013—would affect us immediately. “It’s not clear that [cuts to city programs] will happen right away,” says Terry Gillen, head of the office of federal affairs in the Nutter administration. Or if they’ll affect the city’s current fiscal year. “We just don’t know any of that.” Still, she says, “There’s no question that those programs are on the chopping block if there’s no compromise by January. I would say since the election [we’re] probably getting a little more optimistic that the sequester can be avoided ... we’re hoping that cuts to programs like Head Start can be avoided.”
Republicans, of course, see things differently. The conservative-leaning U.S. Chamber of Commerce claims any tax cuts that go into effect in January 2013 will lead to a direct, proportionate removal of cash into the economy. More money into the government means fewer people spending money in the free market—about $600 billion less in 2013 alone, the Chamber claims.
“In January, we’ll assess where the feds are,” Gillen says. And when they do, there will likely be another crisis to worry about. Can I get a debt ceiling debate up in this jawn?
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