If the nation runs into the “fiscal cliff” on Jan. 1, Democratic Gov. Chris Gregoire fears the worst for Washington state.
It’s a big military state, and she says she’s worried that more than 40,000 of those jobs will be lost if automatic spending cuts take effect. She’s scared that cutbacks might cause a delay in responding to a leak of radioactive waste from a double-shelled tank at the Hanford nuclear dump site. And she says consumers might lose confidence and reduce their holiday spending, plunging the sales-tax dependent state back into recession.
“In my opinion, the worst thing that can happen is that we go over the fiscal cliff, and I just hope everybody listened to what the voters had to say,” Gregoire said in an interview about the so-called fiscal cliff, the combination of tax increases and spending cuts that will happen at the end of the year unless Congress reaches a deal to avoid it.
While Gregoire has been busy advising members of her state’s congressional delegation to reach a deal on the cliff, the state’s senior senator, Democrat Patty Murray, has been busy arguing that it may be necessary – if, she says, Republicans refuse to raise taxes on top earners as part of a budget deal.
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“I don’t want that to happen. I really believe that the consequences of that are severe,” Murray said in an interview. But she added that the impact of enacting a solution that doesn’t include revenue “is much more severe on the people that I care about.”
The stakes are high, and not just for government coffers.
If Congress allows all the tax cuts now in effect to expire, it will cause an unprecedented tax increase of more than $500 billion in 2013, equating to roughly $3,500 per household, according to the nonpartisan Tax Policy Center. Middle-income taxpayers would see their taxes rise by nearly $2,000 a year, while the top 1 percent of households would pay an extra $120,500, according to the center’s analysis.
The issue is commanding the attention of all congressional members as they scramble to conclude the 112th Congress by Christmas. And the Washington state delegation is taking a high-profile role in the talks.
In the Senate, Murray, the fourth-ranked Democratic leader, has emerged as a key player as she prepares to take over as the head of the Budget Committee next month, abandoning her position as the chairwoman of the Senate Veterans’ Affairs Committee.
Last year, Murray said, Republicans had the upper hand as she helped to lead Congress’ so-called “supercommittee,” a special debt-reduction panel that failed to come up with a plan to cut the national debt by $1.2 trillion. But with President Barack Obama winning a second term and the Bush-era tax cuts set to expire at the end of this year, she said Democrats now had gained the leverage in their drive to raise taxes for the richest 2 percent of Americans.
“Last year, what we had was no way to get revenue on the table. Republicans could simply say no and walk out the door, which is what they did,” Murray said. “Now if they say no and walk out the door, we wake up on January 1st with revenue already there. It’s a big difference that way, and it’s a huge difference because we had an election on this issue and America spoke out.”
In the House of Representatives, Rep. Cathy McMorris Rodgers of Washington state has taken a leading role in the debate after getting elected last month as the No. 4 House Republican leader and the leader of the party’s conference. She said the plan to raise tax rates would result in the loss of 700,000 jobs, a plan she described as “a nonstarter.”
“We can raise tax revenue by simplifying the tax code, not increasing tax rates,” she said at a news conference last week hosted by House Republican leaders, adding that Republicans want to avoid “the largest tax increase in American history.”
McMorris Rodgers said she was “confident that we can pass the test” of compromising on a new budget plan: “When it comes to the fiscal cliff, the president and Congress will either fail together or we will succeed together. There’s nothing in between.”
The debate is one of the last for Washington state Rep. Norm Dicks, the top Democrat on the House Appropriations Committee, who like Gregoire is set to leave office at the end of the month.
In a letter to his colleagues, Dicks warned that any automatic spending cuts – a reduction of roughly 8 percent for all nondefense discretionary programs – might result in a downgrade of the nation’s credit rating and in higher unemployment, putting the United States back into a recession. Dicks said members of Congress never intended for such big cuts to take effect and that the possibility of such a thing was meant to force Republicans and Democrats into a compromise.
Without a new budget deal, Dicks said, money would be cut for thousands of teachers in Head Start and special education programs. He said federal agencies would lose thousands of jobs: 7,500 positions in the Department of Justice, 5,400 in the federal courts, 2,200 in the U.S. air-traffic control system and 24,500 in the Department of Homeland Security, including 3,400 border-control personnel, among many others.
Democratic Rep. Rick Larsen of Washington state, whose district shares a border with Canada, is particularly worried about the possible loss of workers assigned to border security, saying it could lead to longer wait times for the public and make it harder to confiscate illegal drugs. In an opinion piece published Sunday in The Bellingham Herald, a McClatchy newspaper, he said it would be reckless to allow the automatic cuts to take effect and that there should be “no sacred cows” as Congress develops an alternative budget plan.
For Gregoire, the debate is all too familiar.
She recalled how the state’s finances were recovering in the summer of 2011 and how things changed dramatically that August as Congress debated whether to increase the national debt level or temporarily shut down the federal government. The fears caused consumer spending to drop sharply in her state, she said, prompting a $1.4 billion drop in the state’s economic forecast a month later.
“Here we are again, with the same conversations,” she said.
But with the discovery of leaking radioactive waste at Hanford, Gregoire said “time is not on our side” and that there was a new urgency to the debate. She said losing any funding for cleanup at the site would be “the worst news in the world from the perspective of Washington state, and I don’t just mean in the Tri-Cities.”