A Fiscal Cliff Fall Could Crush African-American Communities

Higher taxes aren't the only thing Blacks must worry about.

Posted: 12/03/2012 09:15 AM EST

When Treasury Secretary Tim Geithner presented President Obama's plan for averting the fiscal cliff to Republican leaders, Senate Minority Leader Mitch McConnell broke into laughter. But for Black lawmakers, the impact on African-Americans if they cannot successfully negotiate a deal is no joke.

Obama and Congress are currently in a heated and sometimes hostile debate on the fiscal cliff, a term coined to define increased tax rates for all and automatic spending cuts to several domestic programs and the Defense Department's budget that will go into effect in January if they cannot reach an agreement. The two sides are currently at a stalemate because of the president's insistence on tax hikes for the nation's top earners and Republican lawmakers' fierce opposition to the idea. And while both sides agree that some spending cuts must be made, neither has so far been willing to put any on the table, most likely for fear of angering its base.

According to California Rep. Karen Bass, who sits on the House Budget Committee, the hits on African-Americans would just keep coming. In addition to an immediate hike in income tax rates, they would lose the alternative minimum tax. That would means an individual earning about $50,000 would have to pay $4,000 more in taxes per year. The payroll tax cut would expire as well as the federal extension of unemployment insurance for the long-term unemployed.

"That doesn't count the [automatic cuts] to discretionary spending. So, I think it would be a hit of four or five times," Bass said in an interview with BET.com.

Spending cuts to domestic programs also would impact African-Americans in more ways than one. In addition to reductions in programs that some families depend on, such as Head Start, African-Americans, who are overrepresented in public sector jobs, could find themselves on the unemployment line.

"We have to keep in mind that African-American people have lost so much over the last five to seven years," Maryland Rep. Elijah Cummings told BET.com. "We've lost houses. Our 401(k)s, if they exist, aren't worth so much. Many of our folks don't have pensions or savings because we've been trying to weather this recessionary storm. Many people have spent money trying to help relatives."

Cummings has other concerns and said that safeguarding programs like Medicare, Medicaid and social security is vital. A deal that would raise the age of eligibility for social security and Medicare, he said, would harm African-Americans in a number of ways.

"A lot of people who are in the 50-year-old range have lost their jobs. Hopefully, as the recession drifts away, they'll get other jobs but many will never earn comparable wages. That's significant because it affects the formula for their social security," he said, because it means they will receive less when they ultimately retire.

"If we start messing with things like trying to raise the age of eligibility for people who don't have jobs, what are they supposed to do between 50 and the [new] age?" he added. I don't want us to do something short-term that has a far-reaching, negative impact on our community."

Cummings also noted the trickle-down effect. People now in their 30s, who are getting ready to send kids to college or save for their own retirements, could face obstacles.

"They're going to have to help mama and daddy pay medical and survival expenses," he said. "You're talking about something sucking the economic blood out of our community. That is major stuff."

 

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(Photo: AP Photo/Seth Wenig, File)

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