WASHINGTON – If the nation runs over the “fiscal cliff” Jan. 1, Democratic Gov. Chris Gregoire fears the worst for Washington state.
It’s a big military state, and she says she’s worried that more than 40,000 of those jobs will be lost if automatic spending cuts take effect. She’s scared that cutbacks might cause a delay in responding to a leak of radioactive waste from a double-shelled tank at the Hanford nuclear dump site. And she says consumers might lose confidence and reduce their holiday spending, plunging the sales-tax dependent state back into recession.
“In my opinion, the worst thing that can happen is that we go over the fiscal cliff, and I just hope everybody listened to what the voters had to say,” Gregoire said in an interview about the fiscal cliff, the combination of tax increases and spending cuts that will happen at the end of the year unless Congress reaches a deal to avoid it.
While Gregoire has been busy advising members of her state’s congressional delegation to reach a deal, the state’s senior senator, Democrat Patty Murray, has been arguing that it may be necessary to take the plunge — if, she says, Republicans refuse to raise taxes on top earners as part of a budget deal.
“I don’t want that to happen. I really believe that the consequences of that are severe,” Murray said in an interview. But she added that the impact of enacting a solution that doesn’t include revenue “is much more severe on the people that I care about.”
If Congress allows all the tax cuts now in effect to expire, it will cause an unprecedented tax increase of more than $500 billion in 2013, equating to roughly $3,500 per household, according to the nonpartisan Tax Policy Center. Middle-income taxpayers would see their taxes rise by nearly $2,000 a year, while the top 1 percent of households would pay an extra $120,500, according to the center’s analysis.
The issue is commanding the attention of all congressional members as they scramble to conclude the 112th Congress by Christmas. And the Washington state delegation is taking a high-profile role in the talks.
In the Senate, Murray, the fourth-ranked Democratic leader, has emerged as a key player as she prepares to take over as the head of the Budget Committee next month, abandoning her position as chairwoman of the Senate Veterans’ Affairs Committee.
Last year, Murray said, Republicans had the upper hand as she helped to lead Congress’ so-called “supercommittee,” a special debt-reduction panel that failed to come up with a plan to cut the national debt by $1.2 trillion. But with President Barack Obama winning a second term and the Bush-era tax cuts set to expire at the end of this year, she said Democrats gained leverage in their drive to raise taxes for the richest 2 percent of Americans.
“Last year, what we had was no way to get revenue on the table. Republicans could simply say no and walk out the door, which is what they did,” Murray said. “Now if they say no and walk out the door, we wake up on January 1st with revenue already there. It’s a big difference that way, and it’s a huge difference because we had an election on this issue and America spoke out.”
In the House of Representatives, Rep. Cathy McMorris Rodgers of Washington state has taken a leading role in the debate after getting elected last month as the No. 4 House Republican leader and leader of the party’s conference. She said the plan to raise tax rates would result in the loss of 700,000 jobs, a plan she described as “a nonstarter.”
“We can raise tax revenue by simplifying the tax code, not increasing tax rates,” she said at a news conference last week, adding that Republicans want to avoid “the largest tax increase in American history.”
McMorris Rodgers said she was “confident that we can pass the test” of compromising on a new budget plan. “When it comes to the fiscal cliff, the president and Congress will either fail together or we will succeed together,” she said.