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How the so-called “fiscal cliff” might affect Texas

There is of course a very simple way to avoid this.

Best when done in Acapulco

If President Barack Obama and congressional Republicans cannot avoid tripping off the edge of the so-called fiscal cliff, then the Texas budget could be more than $1 billion short over the next two years.

But fewer federal dollars flowing through the state budget would be just part of the problem for Texas.

The state could feel an even bigger pinch because Texas is so dependent on other federal dollars associated with defense, homeland security and border protection, said Eva DeLuna Castro, senior budget analyst for Center for Public Policy Priorities.

The potential for cuts to the state budget and to direct federal spending in Texas is serious enough that state lawmakers plan a hearing on the issue next week, with testimony invited from state agency officials and others about the possible impact.

Federal spending in Texas is about one-fifth of the total economy, DeLuna Castro said. Based on 2010 figures, $226 billion federal dollars were spent in Texas. Social Security made up $43 billion of the spending; Medicare accounted for $16 billion, and defense spending totaled $59 billion, DeLuna Castro said.

As far as the state budget goes, automatic federal spending cuts – which would be triggered Jan. 2 by the sequestration outlined in the Budget Control Act of 2011 — could reach $1.1 billion and affect 13 state agencies, according to the state’s Legislative Budget Board.

Just as a reminder, this dispute is over 1) the Republicans’ refusal to approve an extension of the Bush tax cuts for families making under $250,000 a year unless those making over $250,000 a year get the same extension for the top tax rate, and 2) the stupid “sequestration” budget cuts that the Republicans insisted on as part of the deal they made when they took the debt ceiling hostage in 2011. They’re holding out on saving tax cuts for the wealthy even though they have no leverage since the law will change and all tax cuts will expire if nothing happens by the end of the year and the voters made their preference clear last month in the hope of reaching a “grand bargain” on deficit reduction that gives them everything they want. All that needs to be done is for the House to pass the bill that the Senate already passed to extend the tax cuts for all but the top bracket, and there’s a discharge petition in the House that needs 26 Republican signatures to force a vote on that. The sequestration cuts can be easily undone as well, it’s just a matter of the GOP accepting the results of the election and the reality that tax rates are going up no matter what Grover Norquist says. This isn’t rocket science.

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One Comment

  1. Remember the good old days when the Texas delegation would knock off their grandstanding once in a while in order to bring home the bacon? Now Steve damn Stockman is my congressman and I get to listen to Rafael Cruz talk about how Jim DeMint is a selfless visionary who will bring creative leadership to the Heritage Foundation. Aargh!

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