Outlining the local impact of going over the “fiscal cliff,” Mayor Michael Nutter lent his support to President Barack Obama’s fiscal plan to raise taxes on the richest Americans.
“Unless the budget deal includes significant new revenue, it will result in an enormous cost shift to Pennsylvania cities, municipalities and school districts that we cannot absorb,” said Nutter, president of the U.S. Conference of Mayors.
Nutter was one of four Pennsylvania mayors who took part in a conference call with reporters to discuss the local impact of cuts in federal funding that would result if Congress and the president are unable to reach a deal to avoid expiring tax cuts on Jan. 1.
“As mayors, we believe significant new revenues have to be on the table,” Nutter said.
The mayor, citing a White House report, said if a deal is not reached, “98 percent of Pennsylvania families who make less than $250,000 will see their taxes go up” and that consumer spending would drop by $8.6 billion in Pennsylvania.
In Philadelphia, cuts would result in 100 fewer homes being cleaned of old lead paint under a city program, affecting an estimated 300 children; more than 80 homeowners facing foreclosure would lose the option for counseling, creating a $1.6 million strain on the budget’s of the city’s homeless programs; Head Start cuts would force 400 kids out of the program.
“These and many other other cuts come on top of cuts in state funding to our public schools and community development programs used to leverage private investment,” he said.
The Obama administration and congressional Republicans are at odds over how to deal with the issue. The main bone of contention is Obama’s insistence that taxes go up on incomes over $250,000. Republicans have instead proposed a series of cuts and deduction limits.
“Millionaires and billionaires, folks who can afford to pay a little more, should,” Nutter said.
Nutter, noting that about one-third of federal discretionary spending comes to state and local governments, said cutting was not a complete solution.
“It is clear to everyone that you cannot just cut your way out of the level of debt and deficit the country is facing,” said the mayor. “If the federal deficit reduction plan does not include significant revenues cities and counties and school districts all across Pennsylvania … unfortunately will bear the significant burden of those reductions.”
The Obama administration has launched an extensive public relations blitz to drum up popular support for the president’s plan.
Nutter said he was uncertain where the idea for Monday’s press call originated but that he full supported the president’s plan.
The president has put forth a proposal that would combine a package of rate hikes for the rich and public works spending and refinancing help for struggling homeowners.
Republicans in Congress responded last week with their own proposal which would raise tax revenues by $800 billion over the next decade by ending or reducing tax breaks, particularly on the wealthy. The Republican plan would cut spending by $1.4 trillion, including by trimming annual increases in Social Security payments, and raising the eligibility age for Medicare from 65 to 67.
The White House estimated its plan to avoid the “fiscal cliff” would carve $4.4 trillion from the deficit over the coming decade, including previously enacted cuts of $1 trillion and savings from reduced costs for overseas military operations — approximately $800 billion — as well as interest payments on the national debt.
House Republicans said their plan would cut deficits by $2.2 trillion over 10 years, but they don’t claim previous cuts, war savings or interest costs toward that total. Both plans would block automatic spending cuts set to hit the economy in January.