The combination of tax raises and spending cuts, known as the fiscal cliff, begins taking effect on Wednesday. If no compromise is reached in Washington, North Carolina could lose nearly 30,000 jobs and three percent of its economic output, according to a July report from George Mason University. That’s next year alone. Overall, North Carolina would face more than a $120 billion in cuts over the next decade.
“4,000 parents will lose child care subsidies. That makes it harder for them to go to work,” says Allen Freyer, a policy analyst at the NC Budget and Tax Center. Funding for 6,000 teachers would also be lost, he says.
About 87,000 North Carolinians will lose unemployment benefits that were extended for the recession. Freyer says research, health services, and the defense industry will feel the pain, as well. Now that and most of the other impacts could be muted if lawmakers reach a deal, even after the cliff. But, State Treasurer Janet Cowell worries some damage is already done.
“No matter whether they work something out at this point or not, what they’ve shown at the federal level is an inability to efficiently or effectively solve problems,” Cowell says.
Cowell believes that inability will hurt the market’s confidence, which could affect public pension funds and may cost North Carolina its triple-A credit rating.