Senior Vice President of Hazlett, Burt & Watson, Pete Holloway and Director of Public Services for St. Clairsville, Dennis Bigler discuss the possible impacts on local economies based on the decisions of the federal government to deal with the fiscal cliff.
"If you're a business, and you're having trouble, you've got two choices. You can raise your prices or you can cut your expenditures," said Senior Vice President of Hazlett, Burt & Watson, Pete Holloway. "That's what the 'fiscal cliff' does. It is raising revenues by raising taxes, and second, cutting expenditures in order to cut the outlay of dollars going out."
Going over that "fiscal cliff" to solve the federal government debt problem brings other problems into focus.
"Taxes, really, really increase and they're up to something, over $550 billion. That alone, if those tax increases go through, will cause a recession," Holloway said. "That's what got people worried. On the other hand, they also are having draconian cuts in the expenditure side and those cuts, if the government cuts all that money at one time, it will also lead to a recession."
All of this relates to your town, leaving local governments to provide services, like paving city streets.
"If the fix they create isn't done right, if they cause a recession that could ultimately hurt the city more than the tax cuts," said Director of Public Services for St. Clairsville, Dennis Bigler. "We can see what the recession caused before for local government economies, a tremendous downswing."
Bigler says another problem occurs when Congress mandates what services state and local government should perform, but then fails to fund those services.