Groups Speculate How Fiscal Cliff Will Impact Mass. Economy
As the federal government scrambles for a way to avoid going off the so-called fiscal cliff, a series of automatic cuts in discretionary spending, employers and industry leaders are warning that the cuts could have a significant impact on the economy of Massachusetts. WAMC’s Berkshire Bureau Chief Lucas Willard reports….
If Congress and the president cannot reach a deal to prevent it, at the beginning of January, $110 billion will be cut from discretionary spending in FY 2013. Those include cuts to both defense and non-defense spending.
Now, groups in Massachusetts are calling on the federal government to avoid the cuts to prevent a big hit to the Commonwealth’s hospitals, manufacturers, taxpayers, and economic recovery.
Andre Mayer, research director for the Associated Industries in Massachusetts, said the elimination of the so-called Bush-era tax cuts as well as some tax cuts introduced in the Obama administration would put a burden on both taxpayers and businesses – hindering investment and economic growth.
Andrew Bagley of the Massachusetts Taxpayers Foundation said that the mandatory defense cuts that also could go into effect would have an effect on workers and state tax revenues. Bagley said that Massachusetts’ economy is in part driven by defense manufacturing, and the cuts at the federal level would eliminate thousands of jobs.
Tim Gens, Executive Vice President and the General Counsel at the Massachusetts Hospital Association said that the automatic cuts to Medicare would put a strain on hospitals.
And in a letter signed by 16 university presidents and healthcare providers, it was made clear that cuts in research funding would affect the biotech industry and research universities, which could also hinder investment. An excerpt of the letter reads,
“According to the American Association for the Advancement of Science, overall federal research and development sponsorship in Massachusetts could be cut by $3.1 billion over five years under sequestration, imperiling university‐based research and the private investment it attracts. The effects of this drastic “reset” of research support may drive a generation of young talent to other fields as they seek to establish reliable career paths.”
The letter also states that “between 2007 and 2011, the biotechnology research sector added 3,521 jobs in Massachusetts, more than any other state in this area over the same period.”
Congress and the president must reach a deal to avoid the changes that will take effect on January 2nd, 2013.