What The Fiscal Cliff Means For New York



New Year’s Eve is a night to reflect on the year that’s past. It’s a night to commit to a resolution you’ll never follow, a night to face the next year with a massive hangover and a night to over-plan and over-commit to.

And, for Washington, it’s a night to jump off the fiscal cliff.

As soon as that ball drops in Times Square, America will witness the immediate expiration of the Bush tax cuts for the middle class and wealthy, as well as automatic spending cuts worth billions across the federal and state levels. It’s the dilemma that has the Hill and the White House panicking every hour and every minute of the 24/7 news cycle.
One day, Rep. John Boehner and the House Republicans are refusing to talk to the President; another day, the President is telling reporters that he’s optimistic that a compromise will be reached. And if that compromise doesn’t have higher taxes on the wealthy like the President wants? Well, then it’s a whole other story. Hellooooo, veto power.
However, if no compromise is reached, then the President will just have to wait until the ticking time bomb self-destructs. He’ll get his higher taxes for the 1 Percent but what about the rest of us? New Yorkers, here’s what the fiscal cliff means for you.
“There is real danger ahead for New York’s economy if America goes over the fiscal cliff,” New York State Comptroller Thomas DiNapoli said.
In a statement released last week, DiNapoli pointed to a few (extremely) inconvenient truths of the impending implosion: all 8.9 million working New Yorkers will see a $43 billion increase in taxes and 3.4 million people will be forced to pay the federal alternative minimum tax, joining the 500,000 who currently pay it. Overall, Albany lawmakers will witness a drop of $609 million in federal funds – an enormous migraine that could send local budgets into a tailspin.
I know you may be asking, “But what about the children?” Well, if the immature adults in D.C. can’t get their act together, New York schools may lose $164 million in Department of Education monies. According to an analysis done by the New York State School Boards Association, 87 school districts will have to raises taxes by 1 or 2 percent to make up for the huge loss.
And, at the tail end of a stagnant five years for future generations, that is the last thing we need.
This bleak scenario is one shared by all fifty states, not just New York. Hence why, last week, a group of both Republican and Democratic Governors penned a letter to the President and the Speaker of the House. In it, they urged the parties to get along and avoid a budgetary catastrophe (probable subject line: “GUYS! COME ON!“). These leaders know that this federal gridlock will bleed the already-near-death states, no matter what the politics of the situation are.
So there you have it, fellow Empire State-ers. We have two weeks before the shit hits the fan – both metaphorically and (kinda) literally. In terms of federalism, this is a situation where the federal government needs to step up to save its state subsidiaries. We’ll see what happens.
At least we have the holidays to mull us over… right?