Deal Saver - brought to you by the Charlotte Observer

0 comments
  • Print
  • Order Reprints
  • Share Share

Hagan warns fiscal cliff could cost N.C. 34,000 defense jobs

U.S. Sen. Kay Hagan Wednesday joined a growing chorus warning that falling off the so-called fiscal cliff would have far-reaching consequences in North Carolina.

She said failure to reach a fiscal agreement by year’s end would trigger not only tax hikes on N.C. families but spending cuts that could cost thousands of jobs in the defense industry alone.

And nonprofit leaders warned that automatic cuts in social programs would hurt thousands of North Carolinians.

But others – on both sides of the political spectrum – say falling off the cliff wouldn’t be as dire as some suggest.

“Here’s the dire picture: The nation cannot afford to do what is doing,” said Francis DeLuca, president of the Civitas Institute, a conservative think tank in Raleigh.

He and Hagan were among the latest North Carolinians to weigh in as the noisy debate in Washington echoes louder in the states.

The “fiscal cliff” is the Jan. 1 deadline for a deficit reduction agreement before $1.2 trillion in automatic spending cuts and additional tax increases take effect. President Obama and congressional Republicans are at odds over the issue.

Hagan said she’s willing to make cuts. “We’ve got to put everything on the table,” she said in a conference call with reporters.

While the North Carolina Democrat said she’s willing to cut entitlement spending, she gave no specifics. She did say that Social Security “at this point probably doesn’t need to be part of the discussion.”

She said going off the cliff would mean, among other things, a $2,200 tax hike for a family of four and the loss of $83 million in bio-medical research money in the state and the 1,600 jobs that it supports.

Because half of the spending cuts would come from defense, she said 34,200 of the state’s defense-related jobs could be lost by 2014.

A 2007 state Commerce Department study showed more than 416,000 people, or about 8 percent of the state’s workforce, are employed in the military or in jobs supported by the military in North Carolina.

Meanwhile, the Raleigh-based Budget & Tax Center, a liberal group, reported that almost 4,000 parents would lose child care subsidies and 6,000 teachers could lose their jobs.

And the N.C. Center for Nonprofits said automatic spending cuts would reduce federal support for Head Start programs in the state by $13.4 million, affecting 70,000 low-income North Carolinians.

Even so, some on both sides say failing to reach agreement wouldn’t be the worst thing to happen.

Some progressives say the effects of what they prefer to call the “fiscal slope” would be felt gradually. And while taxes would rise on everybody, they believe Congress would most likely act to reduce them on all but the highest earners.

“This gives Congress a few extra weeks to develop a longer-term solution … that doesn’t hurt our state’s fragile economic recovery,” said Allan Freyer, an analyst with the Budget and Tax Center.

“If Congress uses this time (after Jan. 1) to negotiate a balanced approach deficit reduction that includes new revenues and smart spending cuts that spare the most vulnerable in our society, then it is time well spent,”

DeLuca of the Civitas Institute doesn’t like the prospect of higher taxes and defense cuts. But, he said, “In spite of all that, probably the best thing that can happen is going over the cliff because you’ll have real budget cuts, or spending restraint. You’ll also get a lot of revenue so we’ll close the budget gap.”

Morrill: 704-358-5059

Hide Comments

This affects comments on all stories.

Cancel OK

The Charlotte Observer welcomes your comments on news of the day. The more voices engaged in conversation, the better for us all, but do keep it civil. Please refrain from profanity, obscenity, spam, name-calling or attacking others for their views.   Read more

Quick Job Search
Salary Databases