Morning Read: D.C. Leaders Worry About Fiscal Cliff Plunge

District Divide

The clock is running out for “fiscal cliff” negotiations and Mayor Vincent Gray and Del. Eleanor Holmes Norton are getting a bit anxious.

At a press conference Thursday, the two leaders warned that the District would lose $110 million if the federal government goes over the cliff and automatic spending cuts are enacted. D.C. has a large number of federal employees and contractors and aspects of the city’s budget are intertwined with the federal budget.

Specifically, Gray said the District would lose about $50 million in sales and income taxes revenue (thousands of people could lose their jobs) and another $60 million in federal funding.

Gray and Norton said this would cripple the economy and could trigger another recession in the District.

But as the Washington Post pointed out, this heeding may be a bit overblown. The D.C. government is pretty flush—it posted a $140 million surplus at the end of the year—and economist Alice Rivlin recently said regional fears of a “fiscal cliff” plunge were overstated.


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