"Fiscal cliff" still looming for California
Despite optimistic predictions, there's been little progress in Washington, D.C., as Democrats and Republicans negotiate over the federal budget and taxes.
If they don't cut a deal by the end of the year, analysts say, a collection of tax hikes and budget cuts would cause the country to slide into another recession.
President Obama's aides deny that the talks have reached an impasse, but they are preparing a public campaign in hopes of shaming Republicans into cutting a deal, Christi Parsons reported Monday. Republicans have resisted allowing taxes on the wealthy to increase, which Obama has said is a priority.
The situation, known as the "fiscal cliff," could deliver a damaging blow to states that are struggling to get their own budgets in order.As reported on Friday, California could lose out on $11 billion in tax revenue over the next year and a half if the economy stumbles, according to the legislative analyst. The losses would nearly wipe out any gains from Gov. Jerry Brown's tax hike plan, Proposition 30, which was approved by voters earlier this month.
California faces less risk than some other states, according to a recent Pew study, because it relies less on defense spending and federal funds that could get cut if the impasse is not resolved.
-- Chris Megerian in Sacramento
Photo: White House Council of Economic Advisers Chairman Alan Krueger holds up a booklet as speaks to the media about middle-class tax cuts Monday at the White House. Credit: Jacquelyn Martin / Associated Press