As the year draws to a close, policymakers and the media have their sights fixed on the “fiscal cliff,” the federally mandated set of cuts in spending and increases in taxes scheduled to go into effect at the beginning of 2013. Most economic observers agree that, unchecked, this precipitous drop in government expenditures and spike in taxes could send the economy back into recession. What has not received as much attention is that a given level of deficit reduction can be achieved with very different impacts on employment.
In this month’s jobs analysis, The Hamilton Project focuses on how alternative approaches to confronting the fiscal cliff are projected to impact the nation’s employment situation in the coming year. We also continue to explore the “jobs gap,” or the number of jobs that the U.S. economy needs to create in order to return to pre-recession employment levels.
The Effect of the Fiscal Cliff on Job Growth
A wide range of forecasters, including the Congressional Budget Office (CBO), Moody’s, and Macroeconomic Advisers, project that the wholesale implementation of tax increases and spending cuts scheduled to take place at the year’s end would sharply reduce employment. What does this mean from a practical standpoint? If all the policies that compose the fiscal cliff fully go into effect, the job losses would more than erase all of the gains we have made in returning to full employment, as measured by the jobs gap detailed in the next section, since the start of the recovery.
The CBO recently published estimates of just how many jobs may be lost by the end of 2013, depending on actions policymakers take to resolve the fiscal cliff. For example:
- If the automatic cuts to the discretionary defense budget go forward as planned, the nation would have 400,000 fewer jobs this time next year, compared to if the defense budget remains intact.
- The mandatory reductions in the nondefense discretionary budget, combined with the restructuring of Medicare payment rates for physicians, would also reduce the number of jobs in the United States by about 400,000 by the end of 2013.
Choosen excerpts by Job Market Monitor from
Related Posts
Fiscal Cliff / Federal employees- from skeptical to alarmed
Federal employees have been skeptical for months that the biggest cuts to government spending in history could really happen. But with the “fiscal cliff” a week away, workers are now growing increasingly alarmed that their jobs and their missions could be on the line. President Obama and members of Congress headed out of town late … Continue reading »
Fiscal Cliff / Focusing attention on partisan maneuvers
Washington has a way of focusing the nation’s attention on tactical games over partisan maneuvers that are symptoms of a few really big problems. But we almost never get to debate or even discuss the big problems because the tactical games overwhelm everything else. The debate over the fiscal cliff, for example, is really about … Continue reading »
US / Democrats want jobless benefits in Fiscal Cliff deal
Hovering in the background of the “fiscal cliff” debate is the prospect of 2 million people losing their unemployment benefits four days after Christmas. “This is the real cliff,” said Sen. Jack Reed, D-R.I. He’s been leading the effort to include another extension of benefits for the long-term unemployed in any deal to avert looming … Continue reading »
Fiscal Cliff / UI Benefits will end for 3 M: A Brief Overview of the Legislative Procedures for Adjusting the Public Debt Limit
The Fiscal Cliff means that Unemployment Benefits will abruptly end for 2 million in dec., and nearly one million more in the first quarter of 2013. So the important question is that is the legislative procedures for adjusting the public debt limit ? Here is the summary of a Brief Overview by Congressional Research Service. *-* … Continue reading »
US / Fiscal Cliff and Unemployment Insurance: four options to extend benefits and their costs
The unemployment insurance (UI) system is a partnership between the federal government and state governments that provides a temporary weekly benefit to qualified workers who lose their job and are seeking work. The amount of that benefit is based in part on a worker’s past earnings. CBO estimates that UI benefits totaled $94 billion in … Continue reading »
California / Fiscal Cliff / 400,000 long-term jobless on the edge
The federal budget crisis in Washington known as the “fiscal cliff” has an estimated 400,000 long-term jobless Californians on the edge. A 41/2 -year-old program of emergency federal jobless assistance, which provides many of the state’s unemployed up to $450 a week in benefits, is scheduled to expire Dec. 29 — unless Congress and President … Continue reading »
Fiscal Cliff / Unemployment Benefits will abruptly end for 2 million in dec., and nearly one million more in the first quarter of 2013
Because over five million workers will be unable to collect federal UI benefits next year if Congress fails to act, NELP is calling upon Congress to make this issue a priority during the lame-duck session of the 112th Congress. Not only should Congress reauthorize the EUC program in its current form for the next year, it … Continue reading »
US | Fiscal Cliff | 2 million jobless Americans could lose UI
Congress last lengthened the deadline to file for benefits in February, but lawmakers also restructured the program at the time. The maximum number of weeks the jobless can collect unemployment benefits was reduced to 73 weeks. And in all states save New York, the jobless are no longer eligible for a separate federal extended benefits … Continue reading »
US | CBO | Unemployment lower in the next few years if the fiscal cliff removed
Substantial changes to tax and spending policies are scheduled to take effect in January 2013, significantly reducing the federal budget deficit. According to CBO’s projections, if all of that fiscal tightening occurs, real (inflation-adjusted) gross domestic product (GDP) will drop by 0.5 percent in 2013 (as measured by the change from the fourth quarter of … Continue reading »
Job Market Monitor 
Discussion
Trackbacks/Pingbacks
Pingback: Fiscal Cliff / Avoided at What Cost? « Job Market Monitor - January 2, 2013