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Fiscal Cliff Talks Have Californians Nervous

Fiscal Cliff Talks have Californians Nervousi
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Mike O'Sullivan
December 18, 2012
President Barack Obama and Republican leaders in Congress are engaged in talks to avoid the so-called “fiscal cliff" -- major spending cuts and tax hikes that will go into effect in January, if an agreement on reducing the federal government's debt is not reached by the end of the year. VOA's Mike O'Sullivan reports from Los Angeles that "going over the cliff" would be felt across the country, particularly in California.

Fiscal Cliff Talks have Californians Nervous

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Mike O'Sullivan
— President Barack Obama and Republican leaders in Congress are engaged in talks to avoid the so-called “fiscal cliff" -- major spending cuts and tax hikes that will go into effect in January, if an agreement on reducing the federal government's debt is not reached by the end of the year. 

Medical patient Robbie Reynolds relies on a community clinic for her health care. “I don't think I would have made it without them, all the years that I've been coming here, because there were times that I just needed urgent care,” Reynolds explained.

This health center is called T. H. E. Clinic -- the letters stand for “To Help Everyone” -- and it relies in part on federal government funding.

Clinic president Rise Phillips says the facility's work could be threatened if the president and Congress fail to reach an agreement. “I'm most concerned that the fiscal cliff, if it actually happens, that there are $167 million in cuts that potentially impact clinics like mine,” she asserted.

California is a center for government research, like at NASA's Jet Propulsion Laboratory, where the U.S. unmanned space program is based as well as at facilities such as the Lawrence Livermore National Laboratory near San Francisco, and at the 10-campus University of California system.

It is estimated that the state would lose more than $11 billion over five years in automatic spending cuts for defense, energy and space research, causing job losses that would ripple throughout the state.

At Operation Hope, a non-profit organization that promotes financial literacy, the unemployed and underemployed can look for jobs or start a business at a cybercafé.  Operation Hope's Leonardo Cablayan says people are anxious. “They're looking at how it's going to affect their health care coverage," he said. "How it's going to affect things that currently are entitlements that are helping them...such as extended unemployment benefits, which have been paid by the federal government, but are due to expire."

Those who are working worry about changes to the tax code that would reduce their take-home pay, and business owners worry that consumers will cut back on spending.

Economist Lee Ohanian of the University of California, Los Angeles, wants stable tax rates that are low enough to promote economic growth.  He says that without congressional intervention to avert the fiscal cliff, the federal tax rate for top earners in California, combined with state and local taxes, would reach 60 percent.  Ohanian says that would slow the creation of new jobs. “And we have a jobs problem in our economy.  And that will get worse if Congress passes the wrong policies or if the fiscal cliff comes about,” he said.

Others are worried about uncertainly for the funding of social programs.

Howard Kahn of the LA Care Health Plan, a publicly run health plan with more than 1 million members, says health care is undergoing a major expansion because of President Obama's Affordable Care Act. “So we're busy.  We're almost too busy to spend much time worrying about it," he added. "We do that in our spare time in the evening.”

Economist Lee Ohanian says he hopes that the president and Congress will at least reach a partial agreement to avoid the fiscal cliff, as they work out the details of government debt reduction in the coming months.

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