SACRAMENTO, CA - Should Congress and President Obama fail to reach an agreement on looming tax increases and spending cuts, the effect on the Golden State will be significant.
Most Californians will see an increase in their income taxes, nearly 350,000 people will lose their federal unemployment benefits, school and other program budgets will likely suffer and federal employees may lose jobs.
"It couldn't come at a worse time for California," said Chris Hoene, Executive Director of the California Budget Project, a nonprofit economic analysis group.
Hoene says even if a deal isn't reached by the end of the year, Congress could come up with short-term or long-term fixes in the days and weeks to come. But by then, Hoene says wary investors and consumers may have already inflicted some damage on the state's economy.
"If markets are watching, if investors are watching and not making investments, if consumers are watching and not consuming, it means that this very tenuous economic recovery we're in has a likely of stalling or maybe even is threatened with another downturn," said Hoene.
Hoene says investors and consumers really just need to see some kind of action to instill confidence that we're not headed off the cliff.
It"s not all bad news. Some programs would be spared from any spending cuts if a deal is not reached, including Medi-Cal and Social Security.
Capitol Television News Service (CTNS)