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Mainers Brace for Plunge Over 'Fiscal Cliff'
12/27/2012   Reported By: Keith Shortall

As revelers prepare to ring in the New Year, and toast to the possibilities of 2013, they could also join the rest of the nation in a plunge over the proverbial fiscal cliff. But what does that mean? Will the stock market collapse on Jan. 2nd? Will new tax bills arrive in the mail in on the 3rd? Keith Shortall spoke with observers of the negotiations underway in Washington recently about what Mainers can expect if the deadline passes with no agreement.

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Mainers Brace for Plunge Over 'Fiscal Cliff'
Originally Aired: 12/27/2012 5:30 PM
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 Duration:
3:14

Make no mistake:  The fiscal cliff is a serious precipice, imposed by Congress last year as a way to discipline itself against gridlock.

"Many, many economists agree that if we were to go over the fiscal cliff, it would have fairly dire consquences.  The question is:  How rapidly would those consequences happen?" says Kevin Miller, Washington bureau chief for the Portland Press Herald and Maine Today Media. 

Miller says it's true that the deadline is Jan. 1 - next Tuesday.  "The across-the-board spending cuts would start to kick in - it'd be about $110 billion, $120 billion next year. The question is, those spending cuts would be phased in so we may not see the job losses immediately, but the fear is that you would have a situation where having these things kick in all of a sudden would basically send shock waves throughout the economy, and would certainly affect Wall Street, and we would go back to recession."

"I think with a lot of this, perception becomes reality," says Rebekah Metzler, a former State House reporter for Maine Today Media, who is now a politcal writer for U.S. News and World report in Washington. "It's not necessarily that come the New Year we're going to plunge into this economic free fall based on the cuts, but what Wall Street does and what businesses do based on political leaders not coming to a solution - that's the problem."

Metzler says that even if the deadline passes, Congress will still have some time to enact measures to protect the average American from lost benefits, or higher taxes. "If we go over by a week or two weeks, Congress can make it so that whatever law they pass to keep rates low, presumably they'll be agreement at least for 98 percent of them, who earn less than $250,000 - they won't lose out just because they missed a deadline."

"If nothing was done by the end of January, I'd start to get concerned," says Dante Chinni, a political columnist, and director of a demographics project called Patchwork Nation. "Then I think it's time to say, 'We've gone over something there,' because the longer stalemate goes on, the more troubling."

Keith Shortall: "So the real deadline is the Superbowl."

Dante Chinni: "Look, if we went that far out you'd start to see all sorts of stuff happen in terms of what would happen with the markets, and I think you stsart to talk about long-term damage to the U.S. economy."

But there are those, says Maine Today Media Washington Bureau Chief Kevin MIller, who believe that the measures that would be automatically imposed after a fall from the fiscal cliff are exactly what the U.S. economy needs.

"I think it was the Congressional Budget Office that said that if the fiscal cliff did happen, this would be the single largest deficit reduction in decades, and there are economists out there that say, you know, yes, it would cause some short term pain, but the long term benefits outweigh that short term pain. So there are a number of folks out there who think that inaction would be the better option."

And as of right now, there are no signs from Washington that those economists will be disappointed. 

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