The term "fiscal cliff" is becoming part of our vocabulary. However, whether or not we go over it, East Tennessee could see an impact.
"The fiscal cliff is not one, not just taxes. It's not just spending; it's this whole range of different issues," said University of Tennessee professor Dr. Bill Fox with the Center for Business and Economic Research.
Lawmakers were back on Capitol Hill Monday, working on how to work a budget deal before December 31st. They are trying to agree to a plan to avoid automatic tax increases and spending cuts that would drastically reduce the national deficit.
The deadline is known as a "cliff" because some experts said the changes would be too much at once and could send the economy into another recession
Dr. Fox gave five reasons why East Tennesseans should care about whether or not lawmakers cannot agree to help solve a $1.1 trillion deficit.
#1: If we go over that "fiscal cliff," Social Security taxes would go up on anyone who receives a paycheck. "Suggests that it could be $2,200 to people. Basically it's 2 percent of your income up to $110,000 that you'd not be taking home unless it's dealt with," Dr. Fox said.
#2: Those "Bush-era" tax cuts would end if no deal is reached. That means every taxpayer would see an increase in what they give to the government as tax brackets would change.
#3: Several programs will see reductions in funding, including the Department of Energy, which is responsible for thousands of East Tennessee jobs. Dr. Fox said the DoE would see an eight percent cut if lawmakers don't agree on a new plan. He said he does not know how that could directly impact Oak Ridge workers, but believed fewer contracts could be rewarded there. "Exactly how that plays out depends on the Office of Management and Budget to work out and dig in to the legislation and into the details," he said.
#4: Farmers would take a hit too. Certain federal programs that help promote agriculture could be in jeopardy.
#5: Doctors would see impacted too. "An exact amount of what doctors get paid gets worked out in Congress and under the Medicare program and various amounts of treatments and it would be generally less."
If lawmakers strike a few days after that December 31st deadline, Dr. Fox does not foresee a crisis. However, if it takes longer, he fears our economic recovery could lose a lot of ground.