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What the “Fiscal Cliff” means to you (and OSHA, NIOSH and MSHA)

October 31, 2012
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slow growthExcerpted with permission from Aaron’s excellent EHS newsletter, “Happenings On the Hill.”

There has been a lot of talk recently about the upcoming “fiscal cliff.” Just what is this “cliff” and how does it impact occupational safety and health?

First of all, you need to know that no matter who you are or what you do; the fiscal cliff will impact you and your family. Let’s take a quick look –

The fiscal cliff is another way of stating that when it comes to the fiscal condition of the federal government a “perfect storm” is about to take place. On January first, unless something is done prior to that date, the United States will face several automatic spending conditions.

1) The first is that nearly every individual in the United States who draws a paycheck will see their paycheck reduced by 2%. This is because the “tax holiday” of a 2% reduction in social security withholding will expire on January first. This tax holiday was put in place for the last two years to provide families with additional dollars to spend and prop up the economy. However, unless extended, the withholding will revert to its previous limit. As of now neither the Republicans, Democrats nor the White House have expressed any interest in extending this tax holiday. Odds are this tax holiday will expire.

2) The second part of the fiscal cliff is the January first expiration of the Bush-era tax cuts. There are numerous tax cuts involved that will impact individuals and families in different ways. Some of these include the child care tax credit, deductions for college tuition, reductions in taxes on investment income, even the end of extended unemployment benefits. Hard to tell if any of these provisions will be extended.

3) Finally, the third part of the fiscal cliff is what is known as sequestration. This is probably the most important of the three and if not addressed, could push the country back into an extended recession.

Sequestration is required to take effect on January first unless Congress acts to change the law. This all stems from the failure of Congress to accept a debt/deficit reduction proposal offered by a bipartisan group last year. If the proposal was not implemented the law requires that Congress impose sequestration on January first. And of course, Congress did not accept this proposal.

So what happens on January first:

  • Nearly every department of the federal government is required to reduce spending by approximately 8.2 percent on January first. To give you an example of this impact, OSHA would be required to cut approximately $46 million from its budget, probably resulting in a loss of 81 full time employees.
  • MSHA would lose approximately $31 million.
  • NIOSH would lose 8.2 percent, possibly more if the Centers for Disease Control and Prevention decided to offset some of the CDC loss of $464 million by taking a little more from NIOSH.

What Will Happen?

It’s difficult to say what will eventually happen. Congress did not want to address these issues prior to the election so they decided to return in mid-November to address the problem. And let’s not forget that Congress failed once again to adopt a federal budget for 2013; instead passing a continuing resolution to provide continued funding to the federal government until the end of March, 2013.

Most insiders believe the social security withholding tax holiday will disappear as will several of the Bush-era tax cuts.

As for sequestration most believe Congress will simply pass a law to delay these required cuts until such time as Congress can come up with a better solution.

We are facing a financial catastrophe unless we balance our spending and revenue; yet we seem to have no concerns on the spending habits that could be stopped with no loss to anyone. Yes, in the end it doesn’t cost much to print these legislative measures but it does cost something.

How about Congress showing us the way to save a few bucks?

And while they are at it, perhaps we can stop all of the “earmarks” that provide specific spending for projects that many consider unneeded.

A quick example – EPA will be providing $450,000 to launch an initiative to improve air quality and public health. The program aims to better understand air pollution problems and develop cost-effective strategies for improvement. EPA and its partners will provide technical assistance and training for developing air quality monitoring.

Oh yeah, this initiative is in Jakarta, the capital of Indonesia.

EPA awarded nearly $21 million last year to projects that not only included the project in Jakarta but projects to train Polish municipalities on landfill gas and a study of swine manure in China. For a country facing a deficit of more than one trillion dollars this year alone it is no wonder the electorate ranks Congress’ approval rating at less than 15 percent.

I doubt the November 6 election is going to change any of this but here’s hoping the electorate closely looks at each candidate for all offices and makes their choice based on how we can begin to address the problems that really need tobe addressed.

You can contact Aaron at atrippler@aiha.org, (703) 846-0730.

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