Government cuts could affect Pike County businesses with defense ties

Published 11:00pm Thursday, November 29, 2012

Republicans and Democrats seemed to be making no ground on Thursday in talks to avoid year-end tax increases and spending cuts that threaten to harm middle class pocketbooks.

At issue is a bipartisan desire to prevent the wholesale expiration of Bush-era tax cuts and the simultaneous implementation of across-the-board spending cuts. The potential spending reductions, to be divided between military and domestic programs, were locked into place more than a year ago in hopes the threat would have forced a compromise on a deficit reduction deal before now.

Failure to do so results in the country falling off a “fiscal cliff” at the end of the year.

“The fiscal cliff is an agreement that was made a couple of years ago that there would be some improvement on the deficit, otherwise there will be triggered spending cuts,” explained Scott Beaulier, executive director of Troy University’s Manuel H. Johnson Center for Political Economy.

Beaulier predicts that some kind of agreement will be reached before the end-of-the-year deadline, but said that decision will likely be a patch on America’s financial troubles instead of much needed, significant reform.

“This could be a Band-Aid applied to a very serious situation,” Beaulier said. “Longterm budgetary commitments need to be considered, but both sides will likely be coming back to the table to fight again. This is something that has been happening again and again because things are polarized in D.C. right now. Something is going to have to give.”

As talks stalled Thursday, Democrats said any holdup was the fault of Republicans, who are balking at President Barack Obama’s plan to raise tax rates on incomes higher than $200,000 for individuals and $250,000 for couples.

The GOP said the White House was offering unspecified spending cuts this year. Those would be followed next year by legislation producing savings from Medicare and other benefit programs of up to $400 billion over a decade, a companion to an overhaul of the tax code.

Beaulier said he feels families with incomes below $250,000 won’t experience tax increases, but it’s harder to predict where the government will cut spending and how much.

“A lot of the cuts will be focused on defense,” Beaulier said, noting Sikorsky’s Troy Operations, Lockheed Martin and Ft. Rucker would likely be affected. “Cuts, if targeted on defense, could affect our area financially.”

Ranking Member of the Senate Budget Committee Sen. Jeff Sessions (R-AL) expressed his concern Thursday on the Senate floor regarding “secret negotiations” related to the fiscal cliff.

“All of this secrecy allows the President to position himself as being in favor of a ‘balanced’ plan while the only comprehensive proposal he put on paper, his FY 2013 budget, increases taxes to fuel a further increase in spending,” Sessions said.

Rep. Martha Roby (R-AL) said the possibility of reaching a fiscal cliff is worrisome.

“I’m very concerned about the effect it could have on families in Pike County and throughout Alabama. Higher taxes, higher medical costs for seniors, military cuts – there are real-world consequences at stake. That’s why we’re working to avoid the fiscal cliff in the short term and deal with the national debt over the long term,” Roby said. “I’m concerned about President Obama and the Democrats insisting on tax increases that would be harmful to small businesses. The real problem is spending, and Americans want responsible, reasonable reforms that promote economic growth.”
The Associated Press contributed to this report.

 

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