The Fiscal Cliff Deal's Impact on New York

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Well, contrary to Mayan belief, America made it to 2013 without jumping off the fiscal cliff. Yesterday, at around 9 p.m. or so, the House passed a bill sent from the Senate by a 265-157 vote. After weeks of non-toiling, it's finally over . . . but, in more ways than none, the war has only begun.

We've reported in the past about the fiscal cliff's possible consequences for New York State. These ranged from billions of dollars worth in tax increases to massive school spending cuts. You can find all the details of the shitshow here and here.

Now, with this "compromise" in hand, we can address a few of its provisions that relate to these aforementioned dilemmas. And let's just say that there's an emphasis on the word "few." 

Before we move on, it's important to mention that the deal passed in Washington yesterday is, for the most part, a tax compromise. President Obama said this point himself: "While I'll negotiate over many things, I will not have another debate with this Congress over whether to pay the bills they've racked up." In leaner terms, the majority of this bill is the permanence of 82 percent of the Bush tax cuts, meaning that taxes will rise (for the first time in two decades) for individuals making $400,000 and couples making $450,000, as well as for capital gains and dividends. Everyone below that tax bracket cutoff is keeping their current levels intact.

Back to New York: This compromise averts the $43 billion increase in taxes that faced 8.9 million people. Also, it stops 3.4 million New Yorkers from falling under the federal alternative minimum tax category. Hooray for more cash in your pocket.

Another huge consequence we mentioned last week was the possibility that 200,000 New Yorkers would lose unemployment benefits. Luckily, the Democrats didn't cave on this one: The final compromise will extend these benefits into the new year. Kicking the can a bit further down the road goes a long way for those dependent on welfare, especially 200,000 of them.

The final feature of the compromise that will impact New York is, essentially, a non-feature. In other words, it's not in the bill but, soon enough, it will come back to bite Washington in the ass.

OK, so one of the largest downturns the fiscal cliff posed to Albany was a loss of $609 million in funds and an additional $164 million cut in school spending. Immediate cuts of this caliber would have unleashed a budgetary tailspin on lawmakers upstate. Also, schools would have been forced to raise taxes 1 to 2 percent to make up for the funding void. Needless to say, it would have really sucked.

And, OK, so we mentioned before that the compromise was all about taxes. In order to pass this damn thing, Washington completely ignored the enormous spending side of this boondoggle. This was done as an effort to get it passed through the House, where Republicans there are hesitant to pass anything over $10 (this, unfortunately, includes the $60 billion Sandy relief package).

With that being said, Congress placed a two-month hold on the "sequester" -- the name given to the automatic spending cuts in place, which included the Big Ones for Albany mentioned a few paragraphs ago. Now, the whole "war has only begun" thing at the beginning of this blog post might make a bit more sense to you guys.

The Hill has given itself a ticking time bomb, one that we'll be talking about in weeks to come. In the end, the winners in New York State are limited to taxpayers and those seeking unemployment. The losers? The governmental institutions that make up New York State, many of which will have to hold their breaths (yes, agencies can be personified) until this sequester is addressed.

I guess we'll have to wait and see what Washington has for us.
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3 comments
Kent.Murphy
Kent.Murphy

All the affluent people making up to 400K will feel no impact. America is still FUCKED with a enormous debt crisis. Obama administration refuses to indict the bankers and financial officers who committed fraud. They refuse to prosecute.

OfCourse
OfCourse

So the 2011 "debt limit crises" was solved at the last second and now the fiscal cliff, Probably the 2013 debt limit crises will be solved at the last minute also but eventually it won't get done, the USA will default and the Daily News will have a headline "WORLD TO AMERICA DROP DEAD".  

curadebtrm
curadebtrm

Intersting Discussion. Services like debt settlement, debt consolidation, debt management, and consumer credit counseling are still good resources for the masses of consumers that have their own debt problems. We have to find better ways to deal with debt. The children of the future are the ones who will fully wear this burden.

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