Voters, Clueless about Fiscal Cliff, In for a Shock
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The Fiscal Times
September 12, 2012

The nation may be barreling towards a fiscal cliff that has policymakers in Washington gnashing their teeth and wringing their hands, but lawmakers just returning from a five-week congressional recess say the crisis hasn’t quite penetrated the consciousness of many of their constituents.

For sure, there’s a lot of fretting about the $16 trillion in federal debt, the prospects of rising taxes by the end of the year, and the persistent pain and fear about high unemployment.

But even in this highly charged political season, the threat of a year-end perfect storm of expiring tax cuts and massive defense and domestic budget cuts that could push the economy back into a recession largely remains a preoccupation of congressional and administration officials, budget wonks and the news media, according to lawmakers.

“I think your average person is just starting to learn about the implications of the fiscal cliff,” said Sen. Kelly Ayotte, R-N.H., who held three town hall meetings during the break that focused on fiscal issues. “There is a real concern in general about [inaction] in Washington. There’s a feeling there is no resolution of our fiscal issues and there doesn’t seem to be people working together in terms of addressing the economy.”

Sen. Rand Paul, R-Ky., says that businessmen and average voters are freaking out over the prospects of a sharp tax increase next January, if Congress and the White House fail to intervene to block the expiration of a raft of major tax cuts. “I really don’t know any voters in Kentucky who want their taxes to go up,” he said repeatedly.

And Sen. Dianne Feinstein, D-Calif., frets that “There’s a lack of understanding” among many Californians that deep automatic cuts in the Pentagon budget that are scheduled to take effect in January – the dreaded “sequestration” – could cost her state as many as 225,000 defense-industry jobs, according to one estimate.
“My own view is that sequester was a very bad idea and it ought to be at least postponed for six months,” she said.

Lawmakers and fiscal policy experts are voicing deep concern that the nation is headed for an extraordinary fiscal disaster in early January when more than $1 trillion of automatic spending cuts– equally divided between defense and domestic programs – are scheduled to begin. At the same time, Bush era tax cuts and other tax breaks are set to expire. The Congressional Budget Office, Federal Reserve Chairman Ben Bernanke and other policy experts warn that the combination of the deep spending cuts and the sudden surge in taxes could spur another recession.

The automatic, across-the-board spending cuts or sequestration were approved by Congress and the Obama administration in July 2011 as part of major legislation to raise the debt ceiling while reducing the long-term deficit. The automatic cuts were to take place if a super committee of House and Senate members failed to agree among themselves on how to achieve those long-term savings. The committee disbanded late last year after failing to reach agreement. Now the Budget Control Act requires $1.2 trillion in automatic cuts over the next decade, with the first $109 billion taking effect January 2.

Since last year’s deal, however, many Republican and Democratic lawmakers, Defense Department officials and budget experts have come to regret the action. They fear it will lead to a hollow military force, the loss of more than a million jobs the defense industry, and hardships for members of the military and their families. Last weekend, Republican presidential nominee Mitt Romney sharply criticized congressional Republicans for going along with sequestration.

“This sequestration idea of the White House, which is cutting our defense, I think, is an extraordinary miscalculation," Romney told NBC’s "Meet the Press" in an interview that aired Sunday. "I thought it was a mistake on the part of the White House to propose it. I think it was a mistake for Republicans to go along with it."

Washington Editor and D.C. Bureau Chief Eric Pianin is a veteran journalist who has covered the federal government, congressional budget and tax issues, and national politics. He spent over 25 years at The Washington Post.