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‘Fiscal cliff’ avoided, but cuts, deficit still looming

For Pat Freeman, the “fiscal cliff” isn’t over.

“The revenue part is what passed this weekend but not the expenditures’ side,” said Freeman, CEO of Legacy Link Area Agency on Aging in Gainesville. “That’s what I understand … they’ll be working on for the next couple of months.”

And that’s got her concerned. Federal funding makes up nearly two-thirds of Legacy Link’s $9 million budget, which goes toward programs for seniors, including wellness services and nursing home transition.

Reaction to congressional passage of a tax package over the New Year’s holiday varied from relief over most Americans’ averting a major tax hike to trepidation over what lies ahead with a batch of unsettled issues, particularly spending cuts, or sequestration, and the nation’s debt ceiling.

“They did the popular thing … but they didn’t do anything that’s going to reduce the size of the deficit,” said Charles Bullock, political scientist at the University of Georgia.

“Initially, the package was going to include some tax increases but also spending cuts and they didn’t do any of it. Any economist will tell you that to get out of this (budget) problem, you’ve got to do some of each.”

The package passed Tuesday by the Senate and House extends most of the tax cuts enacted under President George W. Bush for individuals making less than $400,000 and married couples making less than $450,000.

The legislation did nothing to prevent a temporary reduction in the Social Security payroll tax from expiring. In 2012, that 2-percentage-point cut in the payroll tax was worth about $1,000 to a worker making $50,000 a year.

Another “cliff” looms, however, as some $1.2 trillion in automatic cuts in federal spending were delayed by two months.

President Barack Obama said the deal agreed upon this week “protects 98 percent of Americans and 97 percent of small business owners from a middle-class tax hike. While neither Democrats nor Republicans got everything they wanted, this agreement is the right thing to do for our country.”

Mike Scupin, coordinator of the local Lanier Tea Party Patriots, said the outcome was so predictable he hasn’t bothered watching the partisan debates that have strung out since Obama’s re-election in November.

Further, he no longer distinguishes between Democrats and Republicans.

“They’re the same party. They’re different facets of a party,” he said, calling their opposition to each other sheer pretense.

“This was a dog-and-pony show,” Scupin said.

Kit Dunlap, president and CEO of the Greater Hall Chamber of Commerce, said, “We’re relieved they did something. I think (the debate) kept everybody off balance a little bit and having absolutely no faith in Congress.

“Where this (deal) might not be perfect for anyone on both sides, I think it’s time to get on with … hopefully developing a plan to (deal with spending).”

Economists had said they feared going over the cliff without some kind of deal, particularly one that protected average Americans from tax hikes, would have sparked a recession. The country is still struggling to recover from the Great Recession of 2007-08.

Brian Robinson, spokesman for Georgia Gov. Nathan Deal, said congressional action “means we don’t have to enact contingency plans that would require the state to move money to the most high-need programs that were jeopardized.

“We estimated we’d lose $100 million without a deal, and we had a plan to backfill $24 million for emergency programs, such as those where lives would be at risk.”

Federal funds subject to sequestration go to such initiatives as school lunches, public assistance disaster grants and the Ryan White program that provides services to people living with HIV and their families, Robinson said.

Ron Simmons, area director of the University of Georgia Small Business Development Center, said he believes the tax changes will affect area residents because it’s historically a fairly affluent community. However, all workers will lose money from their paychecks because the payroll tax holiday expired, which raises everyone’s Social Security contribution to its prior level, an increase of 2 percent.

“It’s going to be a good year for accountants,” he said. “Everyone’s going to want to know ‘How does it
affect me.'”

As far as resolving remaining fiscal issues, Scupin isn’t hopeful. A new Congress gets sworn in today, but the House majority remains Republican, and the Senate is still Democrat-controlled.

“There is no reason to expect major differences out of this Congress than what we’ve seen,” he said.

“If the American people ever wake up and understand that until we put people that have strong principles and get enough of them up there, we’re destined for this to continue.”

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