FAQ
What is the Fiscal Cliff?
The combination of major tax increases and spending cuts due to take place at the end of 2012 was widely described as a Fiscal Cliff. The tax increases are a result of the expiration of several measures such as the Bush tax cuts of 2001 and 2003 and the payroll tax holiday. A large part of the spending cuts are mandated by the Budget Control Act of 2011. A year-end fiscal cliff deal by Congress prevented the drastic tax increases on many Americans, and delayed the spending cuts for two months.
What is sequestration?
The Budget Control Act of 2011 tasked a Congressional Supercommittee (the Joint Select Committee on Deficit Reduction) to agree to 1.2 trillion in deficit reduction in November 2011. Due to the failure of the Supercommittee, automatic, across the board cuts also known as sequestration were scheduled to occur on January 2, 2013. As part of the fiscal cliff deal mentioned above, sequestration was delayed for two months. The cuts are evenly divided between defense and nondefense discretionary programs.
What is the impact on the metropolitan Washington region?
The fiscal cliff and sequestration would do great harm to the region. Federal spending and procurement have provided the region’s economic stability for decades. Some experts are forecasting as many as 450,000 public and private sector jobs could be lost.
What is COG doing to prevent the fiscal cliff?
COG has called on Congress to immediately enact legislation to avoid the impending fiscal cliff. And it encourages its members, stakeholders and area residents to do the same. In addition, COG's recent Economy Forward report offers a five point plan to strengthen the region's economy amid the major changes in federal spending.
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Other FAQs
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Resource Documents
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A Review of 7 Federal Program Budgets 1981-2010
Source: American University for the National Association of Regional Councils |
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Under Threat:
Sequestration’s Impact on Nondefense Jobs and Services (DC, Maryland and Virginia tables only)
Source: US Sen. Tom Harkin, Chairman, Senate Appropriations Subcommittee on Labor, Health and Human Services, and Education, and Related Agencies
For full report, click here. |
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The Economic Impact of the Budget Control Act of 2011 on DOD & non-DOD Agencies
Source: George Mason University Center for Regional Analysis |
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Federal Deficit Reduction Efforts and Cities
Source: National League of Cities |
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Understanding Sequestration and Its Impact on Local Governments & Regions
Source: National Association of Regional Councils |
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Economic Effects of Policies Contributing to Fiscal Tightening in 2013
Source: Congressional Budget Office |
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Federal Budget Sequestration 101: Perspectives through the County Lens
Source: National Association of Counties |
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Websites
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“Because we knew reduced federal spending was a real possibility, area leaders decided to be proactive and start preparing our region for significant, long-term changes. We developed Economy Forward, a plan to help diversify our region’s economy, build on emerging industries, and attract and retain new businesses and workers.”
- Karen Young, Chairwoman of the Board of Directors of the Council of Governments & President Pro Tem of the City of Frederick, MD Board of Aldermen |
"We stand to lose up to 15 percent of the jobs in metropolitan Washington. A hit like that will have a major negative impact on our present and future growth."
- Frank Principi, Immediate Past COG Board Chairman & Prince William County, VA Supervisor |
"The District’s economy will suffer significantly if Congress does not find a solution to prevent sequestration from taking effect. The District of Columbia and our entire region, for better or for worse, depend to a significant degree on federal spending. "
- Vincent Gray, Immediate Past COG President and D.C. Mayor |
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To receive email alerts related to the fiscal cliff, federal spending, or Economy Forward please visit mwcog.org/subscribe and add "Fiscal Cliff Updates" to your subscriptions
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