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The latest on the Key Bridge collapse, New York puts forth legislation to get clean energy projects on the grid and Wisconsin and other states join a federal summer food program to help feed kids across the country.

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Republicans float conspiracy theories on the collapse of Baltimore's Key Bridge, South Carolina s congressional elections will use a map ruled unconstitutional, and the Senate schedules an impeachment trial for Homeland Secretary Myorkas.

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Economists: Not Really a "Cliff" If a Fiscal Deal is Likely

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Thursday, December 20, 2012   

PHOENIX, Ariz. - The White House and Congressional Republicans are still talking about how to avoid the so-called "fiscal cliff." Some economists say as long as a deal looks likely, it's more like a slope that would be easy to get back up.

Jared Bernstein, a Senior Fellow with the Center on Budget and Policy Priorities, says the effects of many of the expiring tax cuts would not hit until people file their tax returns for 2013. Most government agencies have funding to last for a while, he adds, so as long as a deal is on the way, he expects Americans could avoid the worst.

"If it looks like there is a deal solidly in the making, then the ramifications of going over the 'cliff' will be short-lived. They could be reversed pretty quickly."

He says deficit spending stimulates the economy, in the short term. So without a deal coming, Bernstein says the economy would react very negatively to the prospect of half a trillion dollars in sudden spending cuts and expiring tax breaks. The Congressional Budget Office estimates that could mean unemployment as high as 9 percent in 2013, he warns.

"That will start to have a negative impact on the economy in January and February. The unemployment rate could easily reverse course and start to go up quickly."

Arguing that entitlements are driving the deficit, Republicans in Congress have voted to cut Medicaid sharply. They also have voted to raise the age at which people can qualify for Medicare and reduce Social Security benefits.
According to Bernstein, those changes would land hardest on seniors and the poor. He calls the plan to raise the age for Medicare a particularly bad idea, because it shifts costs directly onto the elderly. He says it would also drive up health care costs up for the whole system.

"We're taking the youngest and healthiest elderly out of the more efficient part of the system, and making them the oldest and least healthy people in the more inefficient part of the system. They're very likely to be uninsured, which will end up costing more and be much worse for them."

A rise in tax rates for the wealthy looks likely. Republican proposals to dramatically cut Medicaid, Medicare and Social Security look less likely at this point. Arizona has roughly 1 million seniors relying on Social Security and Medicare, and 1.3 million on AHCCCS (Access) Medicaid.

More information about the "fiscal cliff" is available from the Center on Budget and Policy Priorities.




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