Updated Nov 15, 2012 - 1:53 pm
Fiscal cliff looms large but especially in Arizona
PHOENIX -- Arizona's economy will take a heavy hit if the federal government is unable to avoid the fiscal cliff, a Valley economist said.
Elliott Pollack said the nation would go into another recession, Arizona would lose about 50,000 jobs tied to the defense industry and people would put the clamps on spending to offset higher taxes. But it is all preventable, according to the real estate and economic consultant.
"It has turned quite real," he said. "It hasn't been dealt with. If we go into a recession, it will be a crime in my opinion. Say what you want about politicians, but historically they get in a backroom and work out a deal that is best for Americans.
"This time around they have not done that. They're too stuck in their ways both Republicans and Democrats to make the compromise to get things going."
The Tax Policy Center estimates that failing to reach a deal before the cliff would cost every U.S. household about $3,500. A typical middle-income family would see taxes rise by about $2,000. Those in the top 1 percent would pay an additional $120,000.
"If the Bush tax cuts go away, it would cost the economy $330 billion in 2013," said Pollack.
Large tax increases and spending cuts would kick in Jan. 2, 2013 if President Obama and Congress cannot reach a budget deal.
The cliff is on Phoenix Mayor Greg Stanton's mind.
"I am very worried about it. All Americans should be worried about it," said Stanton. "If we go off of this fiscal cliff, it will put our economy back into recession here."
He said that would put a lot of people out of work.
"In Arizona alone, we are expected to lose close to 40,000 jobs in defense and aerospace," said Stanton.
"On the non-defense side, it would be another 12,000 jobs."
KTAR's Bob McClay contributed to this article.
Jim Cross, Reporter