Fiscal Cliff
8:36 am
Mon December 3, 2012

Florida Economy, Taxes, Jobs Teeter On Cliff

What would a plunge off the fiscal cliff mean in Florida?

Disaster, according to the data. Higher taxes, job losses and probably a recession because of curtailed consumer spending.

Precarious: Florida's economy and employment and the tax obligations of its residents are balanced on the fiscal cliff.
Precarious: Florida's economy and employment and the tax obligations of its residents are balanced on the fiscal cliff.
Credit Stuart Miles

And it will happen, according to the Sun Sentinel and many other sources, if White House and Congressional negotiators don’t find a more reasoned approach to reducing the deficit and debt than the steep tax hikes and spending cuts that were put in place as an incentive to negotiate.

The deadline is Dec. 31. And if it's missed, these could be the consequences for our state:

  • A loss of up to 140,000 jobs thanks to a reduction in state economic output estimated at $16 billion.
  • Tax breaks many of us have enjoyed since the George W. Bush administration would expire, raising the tax bill of a middle income family of four by more than $2,000 and adding at least $1,000 to the Social Security tax of someone making around $50,000 a year.
  • Schools, particularly in large urban districts such as Miami-Dade and Broward, could lose teachers and after-school programs in art, music and reading.
  • Nearly 114,000 unemployed Floridians would lose their unemployment benefits, further eroding consumer spending.

The Sun Sentinel reports another large and heavy ball would start rolling with cuts in defense spending:

The biggest blow would hit defense contractors and thousands of small businesses that supply them, as the impact of a nationwide $55 billion defense spending cut ripples through local communities from the Panhandle to Orlando to South Florida.

Florida would lose 41,905 jobs directly and indirectly from defense cuts alone, according to an analysis commissioned by the Aerospace Industries Association.

"The impact already has affected some of the smaller guys down the line, because orders [for military-related components] have not been placed," said Tom Kennedy, president and CEO of the South Florida Manufacturers Association.

But the ramifications reach well beyond the federal workforce and those who do business with the government. Another recession would prompt other employers to trim their payrolls, meaning more layoffs, reduced income and less money for consumers to spend.

About 3.5 million state residents depend on Social Security and Medicare.  Their benefits are not subject to the automatic cuts but the growth of these "entitlements" will be a negotiating point as Democrats and Republicans try to stay well back from the fiscal cliff.