News Column

Calif. Bears Risk of Serious Tumble From Fiscal Cliff

Dec. 13, 2012
Golden Gate Bridge
Golden Gate Bridge

With the "fiscal cliff" deadline less than three weeks away, more Californians begin to worry about its serious impact on the Golden State's economy and their retirement benefits.

The California Legislative Analyst Office (LAO) estimated that the state could lose more than 200,000 jobs and as much as 4.5 billion dollars in federal funds while the state budget might shrink by 11 billion dollars over two years.

"Most people think the economy would be drawn into a recession and just like in any recession, that would effect the state's economy and revenues and result in billions of dollars of less tax revenue for the state," said Jason Sisney, spokesman for the LAO.

Southern California, home to most high-value contracts, would be hit especially hard by spending cuts expected to cost 135,000 jobs next year.

Programs for low-income families, which rely on federal funding, could also see their services cut.

Robert Kleinhenz, chief economist at the Los Angeles County Economic Development Corp., told the press that automatic spending cuts would represent a loss of 22.7 billion dollars in gross state product, the annual measure of goods and services produced in the state.

As Washington is considering cramming changes to Medicare and Social Security, Californians, especially the senior and retired, are more upset.

A report by the American Association of Retired Persons (AARP) shows how a last-minute budget deal could affect millions of Californian seniors.

Currently, nearly 3.7 million seniors receive Social Security benefits at an annual average of 13,800 dollars in California, where Social Security makes up about 52 percent of the typical older citizen's income and these benefits keep 28 percent beneficiaries out of poverty, according to AARP.

"Millions of people who worked hard for years to earn these benefits deserve better than to get pushed over this fiscal cliff. Social Security is not a cause of the budget deficit and it therefore shouldn't be used to resolve it," AARP California State Director Katie Hirning said.

More retirees are concerned about Medicare, which covers roughly 4.1 million Californians who averagely spend 15 percent of their income (approximately 4,000 dollars) on out-of-pocket medical expenses each year, according to AARP.

In 2011, Medicare spent an estimated 33.4 billion dollars on health care services in California. If Congress raises the Medicare eligibility age from 65 to 67, more than 580,000 Californians would be without health coverage and forced into the private insurance market at an estimated additional cost of 2,200 dollars per year, AARP said.

"Raising the Medicare eligibility age would dramatically increase out-of-pocket costs for recently retired and soon-to-retire seniors, drive up premiums for those already enrolled in Medicare, and increase overall health care costs," said Hirning.

"Instead of solving problems, these kinds of changes would create even more of them, while further damaging the retirement security of millions of people," Hirning added.

AARP said it looks forward to working with legislators on proposals that strengthen Social Security and Medicare for all generations, but not by cramming changes to these vital programs into a last-minute deal that could harm all of them.

(c) 2012 Xinhua News Agency - CEIS. Provided by ProQuest LLC. All rights Reserved.

Source: Copyright Xinhua News Agency - CEIS 2012

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