Economics instructor: No need to panic about fiscal cliff (yet)
December 12, 2012 3:55PM
Pittsburg State economics instructor Mike McKinnis doesn’t believe there is a reason to panic about the so-called “fiscal cliff” -- Yet.
At the same time that elected officials in Washington look toward Jan. 1, 2013, the date on which numerous tax cuts will expire and a myriad of spending cuts take effect, many Americans are waiting to see how they could be affected should no deal be reached by the beginning of the new year.
McKinnis, however, said there is little reason to worry if a deal isn’t reached by Jan. 1.
“The term ‘fiscal cliff’ is a bit of a misnomer because the effects of nothing getting done will be more gradual than they will be immediate,” he said. “Plus, it’s not as if everything will come crashing down on January 1 if no deal is reached. I’m not going to panic on January 1. However, if we get two to three weeks into January and there is no deal, it may be a different story.”
McKinnis said the current financial situation is “one of our own creation.”
“All of this is a perfect storm that’s been 10 years in the making,” he said. “On one side, we have the 2001/2003 tax cuts that are set to expire at the end of this year. On the other side, we have spending cuts that were agreed upon as part of the deal to raise the debt ceiling in 2011. All of this is hitting us at the same time, and we’ve done it to ourselves.”
If no deal is reached and all tax cuts expire and spending cuts go into effect, McKinnis said it could have serious consequences locally.
“We would definitely feel it,” he said. “This six-county area in southeast Kansas is down about 3,200 jobs since Dec. 2007. If we do go over the proverbial cliff, I think we could see more jobs lost. It would really hit this area hard.”
McKinnis said he is optimistic that the federal government will work out a plan to avoid a “financial disaster.”
“I think they’ll figure something out,” he said. “This is one of those moments in our history where we need heroic decisions to be made for the good of the country. I think they’ll get something done.”
©2012 Pittsburg State University