Fiscal cliff looms for DC region; businesses appeal to Congress

Fiscal cliff looms for DC region; businesses appeal to Congress

The Washington, DC region is unprepared to face the massive federal cuts that would result from the fiscal cliff scheduled for January 1 unless Congress acts, says a new report from the Metropolitan Washington Council of Governments.

Today, the combination of slowing federal spending, automatic spending cuts of $1.2 trillion (sequestration), and ongoing budget uncertainty is pushing metropolitan Washington dangerously close to a fiscal cliff, says the report, Economy Forward. From 2000 to 2010, federal spending in the region more than doubled. In 2010, Virginia, Maryland and D.C. were first, fourth and fifth among the states in receiving federal procurements.

Sequestration or not, the slowdown in federal spending has already begun and is likely to accelerate. In 2011, federal employment dropped for eight months. Between 2010 and 2015, the share of metro Washingtons gross regional product coming from federal spending is forecast to drop by 3.5 percent – a trend that will greatly affect the local workforce and area businesses.

But the Washington area isnt the only part of the country worried about the fiscal cliff. On September 12, the U.S. Chamber of Commerce sent a letter signed by 298 organizations to President Obama and members of Congress, urging them to act now to avoid sequestration. Economists from across the political spectrum warn that such tax increases and spending cuts would have a devastating effect on a still sputtering U.S. economy, quite possibly returning it to recession, the letter said.

The letter urged Congress to extend the lower Bush-era tax rates for individuals and businesses and find spending cuts to replace the lost revenue.

Among those signing on was the American International Automobile Dealers Association.