Surry County’s new delegate in the U.S. House of Representatives said it’s too early to tell what the local ramifications of the so-called “fiscal cliff” might be.
“It’s difficult to answer that question,” said Rep. Howard Coble, a Republican who represents North Carolina’s Sixth District, “because I don’t know what will take place at the cliff’s edge, but I suspect that everyone will be affected in one way or the other.”
Also known as “sequestration,” the fiscal cliff is the result of the failure of the Joint Select Committee on Deficit Reduction, known colloquially as the Simpson-Bowles Committee, to reach an agreement on reducing the federal deficit by up to $1.5 trillion.
The act that established Simpson-Bowles, the Budget Control Act of 2011, included a provision to sequester the funds, generating automatic across-the-board cuts that take effect on Jan. 2, 2013 should Congress fail to reach an agreement prior to that date.
The only recourse available to the legislature is for its members to reach a compromise agreement that removes the legal requirement of the Budget Control Act. Any compromise reached must be signed by President Barack Obama before Jan. 2, next year.
Should the automatic cuts go into effect they will be divided between defense spending ($500 billion), and non-defense spending ($70 billion).
Speaking from his Washington, D.C. office, Coble said the country is on an economic brink.
“There’s a good chance it will be re-examined again, but at this point we just don’t know,” he said.
Locally, the cuts to the federal defense budget could have little impact because there are few — if any — defense contractors in the county, but Coble said it is likely that sequestration could affect every taxpayer in the county in one way or another.
Sequestration, coupled with the expiration of the tax cuts passed by President George W. Bush on Dec. 31, makes for a bleak fiscal picture, Coble said.
“If sequestration indeed becomes reality, it could have an impact on every taxpayer in the county because the Bush tax cuts will expire unless we extend them,” he said. “This could have a dismal effect on small businesses everywhere in the country.”
If the Bush tax cuts are allowed to expire, the now-35 percent tax rate on the estate tax, also known as the so-called “death tax,” will be increased to 50 percent, Coble said.
“That could affect everyone,” he noted.
In addition, federal funding to states could be cut, although the Congressman said the amount of cuts is unknown at this juncture.
“I regret that I can’t give you page and verse on this, because no one really knows what will happen,” he said.
But impact on federal agencies is a little more clear, he said.
“Salaries for federal employees will be reduced to 2006 levels, according to the Administrative Office of U.S. Courts,” Coble said, noting that more than 6,300 jobs would be eliminated. “Many courts will be forced to reduce their hours or close on additional days, payments to jurors and public defenders would likely be suspended and court security would be cut in half.”
And the courts aren’t the only things on the chopping block.
Coble said figures being tossed around by the Department of Justice indicate that federal law enforcement agencies also stand to be cut by around $5 billion, including nearly $500 million at Immigration and Customs Enforcement. Those cuts could invariably include positions being lost in multiple agencies.
“I know that these figures I’ve given you aren’t pleasant, but neither is the debt we’ve encountered, and a lot of that has to be laid at the feet of the President,” Coble said.
And he isn’t holding his breath for a much-anticipated compromise, either.
“I’m not sure how much is going to be accomplished during this lame duck session, but if we don’t take action it could conceivably damage every small business in the country,” said the congressman.
And although there is a lot of talk and speculation among the legislature and media, Coble said nothing is concrete at this point.
“What needs to happen?” He asked rhetorically. “That’s a good question. I don’t have the answer and I’m not sure anyone has the answer right now. We’re just going to have to come to some sort of agreement.”
Former Surry County Congresswoman Virginia Foxx, who still serves in Congress but no longer represents Surry County as a result of statewide redistricting, laid the blame for the impending fiscal cliff squarely at the feet of Washington Democrats.
“Republicans want to work with the President and Congressional Democrats to spare the American people from the largest tax increase in history, which is scheduled to hit families this January.
“But at this point, House Republicans are the only leaders in Washington bold enough to solve this problem without imposing corrosive policies that will yield more debt, more spending, and nearly one million fewer American jobs.
“In addition to cost-cutting efficiencies, House Republicans are considering comprehensive tax reforms that will increase revenue by eliminating senseless tax loopholes. History has shown that flattening tax rates, in conjunction with cutting loopholes, can increase federal revenue – without raising taxes on a single small business.
“Republican President Ronald Reagan was able to accomplish such growth-inducing reforms with Democrat Speaker Tip O’Neill. Why can’t President Obama work with Speaker John Boehner and House Republicans to reform our uncompetitive tax code and accomplish the same?”
Reach Keith Strange at email@example.com or 719-1929.