As it becomes increasingly likely that Congressional Republicans will refuse to submit to the idea that rich people should be taxed more, the country faces $7 trillion in spending cuts and tax increases as part of the "fiscal cliff" that takes place on January 1. The expiration of the Bush-era tax cuts (including the low capital gains rate) and huge spending cuts will take months to kick in, and thus can be averted. But two things will happen immediately: payroll taxes will increase by 2% and two million unemployed Americans will stop receiving federal unemployment insurance, and 200,000 of them reside in New York.
Funding to maintain the benefits would cost $30 billion—considerably less than the $115 billion it would take to maintain the payroll tax cut. California is the only other state with more citizens receiving the insurance from the Department of Labor. According to the National Employment Law Project, in addition to the two million people who would lose the benefit, one million more citizens would lose access to the program in the first quarter of 2013. That would contribute to the already dismal economic forecast for that quarter: 1.8% overall economic growth, down from the 3.1% seen in the third quarter of 2012.
President Obama returned to D.C. yesterday from his holiday break in Hawaii in hopes of brokering a deal, but news of the president offering a "scaled back" plan to Republicans who are too afraid of raising revenue from the top 2% of taxpayers proved false. Members of the Senate have already returned, and Speaker of the House John Boehner just told his caucus that they must return by Sunday. In short, we'll need a pumpkin-spiced miracle.