Anyone listening to or following the news about the so-called “fiscal cliff” knows that Congress and the White House are in the midst of yet another battle over the budget. Part of the cliff is the Bush era tax cuts that are set to expire for all Americans by the end of the year. President Obama wants to retain them for the first $250,000 of income earned, while the Republicans favor extending the cuts for all and looking for revenues from closing tax loopholes and capping deductions.
During a speech in the White House to middle class Americans, President Obama urged citizens to contact their representatives in Congress and tweet using the hash tag #My2K to explain what the $2,000 increase in taxes the average Americans will see on January 13 would mean to them.
The other part of the cliff is this thing called “sequestration” which could result in significant job losses, federal government furloughs and end to some government contracts. Sequestration is a process of automatic across-the-board cuts under which budgetary resources are permanently canceled to enforce budget policy goals.
Given that a substantial number of African Americans and some Latino Americans work in the federal government, these groups already suffering from double digit unemployment could be made to bear the brunt of sequestration cuts. According to a 2010 study by the U.S. Office of Personnel Management, Blacks make up almost 1 in 5 non-postal federal employees, or 17.5% while Hispanics 7.7%.
So these two groups, it stands to take the heat of layoffs , furloughs, reduction in hours and elimination of cost of living allowances and raises.
Let’s rewind a bit. Recall last year around this time, Congress assembled a “super committee” of half Democrats and half Republicans and tasked them to come up with a deficit reduction plan. When they weren’t able to come up with the plan, a default, the sequestration, went into effect. Half of the cuts will be to defense spending and the other half non-defense spending.
The first set of cuts will take effect on Jan. 2, 2013 and will continue for 10 years. Over that time, spending will reduce by a total of $1.2 trillion. Further, a substantial chunk, approximately $109 billion will be reduced this coming fiscal year 2013 unless Congress passes an alternative plan.