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Tue December 4, 2012
Fiscal Cliff Could Cost NM 20,000 Jobs
New Mexicans could potentially lose 20,000 jobs if the U.S. Congress fails to reach an agreement on the “fiscal cliff,” goes into effect in 2013.
The fiscal cliff refers to automatic spending cuts and tax increases set to go into effect on January 1.
Richard Haas, the Chair of the Las Cruces Chamber of Commerce doesn’t blame just Democrats or Republicans.
“It’s both sides of the aisle. It’s not one side or another. They’re both acting like children and they need to grow up and get on with the business of the country,” says Haas.
The business community in Las Cruces needs some certainty, according to Haas.
“There’s a lot of frustration -- that you can’t plan. If you knew they were gonna act in one direction, then you could plan accordingly. Businesses need to plan 90 days out, six months out. Typically they don’t turn on a dime.”
Chris Erickson, Economics professor at NMSU, agrees businesses want an answer - even if it’s not the one they hope for.
“The lack of certainty is in of itself a negative on the economy, and what we need in my opinion is to have the fiscal cliff fixed in Washington D.C. by Congress, by the president as quickly as possible,” says Erickson.
Erickson thinks the country needs to deal with the deficit.
“The question is when and how dramatic do those changes have to be,” says Erickson.
But he thinks slower is better than the proverbial cliff.
“But that’s not current law. Current law is for all these tax programs to expire and for sequestering to begin at the same time. That $560 billion reduction in the deficit will almost inevitably throw the economy into a recession.”
He says New Mexico is particularly vulnerable to cuts at the federal level.
Erickson estimates if the fiscal cliff goes into effect, it will cost New Mexico about 20,000 jobs.
“New Mexico is the sixth-largest net recipient of federal funds. We receive about 12 thousand dollars per person in federal funding. That goes to salaries at Los Alamos, largest employer in the state, salaries at Sandia. It goes to fund research at NMSU.”
He says all those programs, since they receive federal money, will be adversely affected.
Some are calling this event the fiscal slope since some changes take effect over all of 2013. But not Erickson.
“I disagree. I think we’re already seeing the effects of the fiscal cliff as businesses begin to plan for the effects of the fiscal cliff.”
Politically, it’s hard to compromise because neither side wants to look like the loser in the deal.
But the real losers might just be American taxpayers, especially in states like New Mexico where federal funding is high if that deal is not reached.