We've written about how deterimental going over the fiscal cliff could be to the most vulnerable in our country before.
However, various commentators have argued it would not be detrimental. We'd like to set the record straight:
On taxes, the most vulnerable WOULD see a tax increase. According to the Tax Policy Center, the bottom income quintile would see their taxes rise by $412 on average, leading to a 3.7% reduction in their after-tax income.
These increases in taxes are primarily caused by the expiration of the payroll tax cut and the expiration of the expansions of various refundable credit expansions, such as the child tax credit and earned income credit for married couples and families with three or more children. While these credits would still exist if we go over the fiscal cliff, they were expanded in 2009, and, those expansions would be cut if we go over the cliff. As we have pointed out before, the expansion in 2009 has especially benefited our most vulnerable.
It's also fair to say that the fiscal cliff would cause a recession. Even those believing we should go over the cliff have conceded that we would still have a recession.
While there is much discussion on how quickly that recession could occur, when it does, it's likely to hurt our most vulnerable the hardest. Let us explain:
If we go over the fiscal cliff, the economy is due to contract by 0.5 percent in 2013 according to the Congressional Budget Office, and the unemployment rate will likely rise to 9.1 by the end of 2013. History often repeats itself, and any time our economy goes into a recession, we see our most vulnerable reach higher unemployment rates.
In addition, disrectionary programs that help protect our most vulnerable will also be cut if we go over the fiscal cliff. These programs are a part of across the board 8 percent cuts in discretionary spending. Here's some numbers that you may have not heard from those that want to go over the fiscal cliff:
- Heating Assitance Program cut by $285 million. In Connecticut, for example, the state saw a 13% increase in applications this year. We simply cannot afford to cut this program right now.
These are some big numbers, and they have a real impact on Americans that can afford it least. Luckily, if we avoid the cliff, and come together to Fix the Debt, we can avoid these painful, reckless cuts to these very important programs.
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- President’s Fiscal Year 2015 Budget, the Good and the Bad 03/05/2014
- White House Budget; What Should Be In It? 03/03/2014
- New Plan Moves Tax Reform Forward 02/26/2014
- Retreating on Military Retirement Reform 02/25/2014