With the so-called fiscal cliff is looming, two area politicians in Washington said Friday they were optimistic an agreement could be reached before it went into effect. Two local college officials said they, too, were hopeful.
The fiscal cliff refers to $500 billion in tax increases and spending cuts that will take effect after Jan. 1 if Washington doesn't take action.
Sen. Kirsten Gillibrand, D-N.Y. is hopeful the fiscal cliff can be avoided, her spokesman, James Rahm, said.
The senator expects that “Congress can come together in a balanced and bipartisan way to cut wasteful spending, while protecting middle class tax cuts,” he said.
This would ensure that families struggling the most in this tough economy are not asked to sacrifice the most, he said.
“I believe we will avert it,” said Rep. Chris Gibson, R-Kinderhook.
Gibson was in bipartisan discussions Friday, discussing tax reform that would generate more revenue, as well as spending cuts.
“I am working with colleagues to get more to sign on,” he said.
John Nader, provost and economics professor at the State University College of Technology at Delhi, was encouraged.
“I’m cautiously optimistic some agreement can be reached,” he said. People in both parties know the economy can’t afford the hit, if such an agreement was not achieved, “now that we are beginning to get a slow recovery.”
A solution could take the form of interim agreements that could give negotiators more time, he said. But if that doesn’t happen, the full effect won’t be felt at once. While tax rates may go up, the bite will be phased in as paychecks are received.
The spending cuts also will be phased in. This would include Medicare reimbursements to area healthcare providers.
Charles Moran, financial service program director at the State University College of Agriculture and Technology at Cobleskill, said the issue provides “massive uncertainty to the economy."
"We need stability so businesses and individuals can plan their future,” he said. Unless someone takes the “steering wheel” there are a long list of things, including taxing of certain Medicare benefits, that will affect everyone.
Negotiators should go back to the Simpson-Bowles fiscal commission plan released in 2010, which could serve as the framework for discussions, he said. That plan calls for spending cuts and revenue increases as a way to cut $4 trillion from the deficit by 2020.
“There are no easy solutions,” he said. “We need to find a pathway that would lead to more stability.”
He was optimistic the two sides could work together to meet the challenge.
“I think there is increasing recognition that it’s something to fear," he said.