Barry Rascovar: Get used to life on the cliff -- Gazette.Net


“Tell me again about this ‘fiscal cliff,’” my wife asks.

“It’s simple,” I tell her reassuringly, though it’s far more complicated and troubling than I’m willing to let on.

“If President Obama and House Speaker John Boehner don’t compromise on how to get the federal budget back in good working order, everyone’s taxes go up Jan. 1, stocks will tank and the economy is likely to sink back into recession.”

Positive signs earlier this week point to a just-in-time deal of sorts — perhaps.

Even if a deal is struck, it won’t get us off the fiscal cliff for long, delaying new confrontations until late 2013.

So be prepared to remain captive cliff-dwellers.

The isolation of Washington, D.C., politicians is stunning. While die-hard Republicans and Democrats on Capitol Hill are consumed by ideological battles, fewer and fewer Americans understand why bickering politicians can’t find common ground and get Washington back on sane financial footing. The last thing we need is devastating military and domestic cuts and a raft of higher taxes.

Yet even if a deal is reached, will it hold?

Republican hardliners — the tea party absolutists — are ready to revolt at any hint of compromise. They’ve done it before.

At the same time, if the deal is too limited in scope, the reaction from financial markets will be harshly negative, sending stocks swooning. Businesses will freeze hiring plans and cut spending. More people will be thrown out of work.

Maryland is ground zero for this implosion, if it happens.

With so many federal workers and defense-related contractors on the northern side of the Potomac, the Free State would get hammered from the federal layoffs and across-the-board reductions. George Mason University estimates total jobs losses in Maryland would reach 115,000.

Almost immediately, folks would get less take-home pay, thanks to an automatic restoration of full payroll tax rates.

Maryland’s state budget would be blown to smithereens even before Gov. Martin O’Malley introduces his 2013 spending plan in February.

Federal funds earmarked for Maryland programs would be cut by $117 million. The state’s overall budget shortfall could top $1 billion in a hurry.

That would require incredibly painful decisions in Annapolis — steep reductions in aid to the counties and to public colleges and universities. Another raid on the Transportation Trust Fund would be unavoidable.

In the immortal words of baseball philosopher Yogi Berra, it could be “déjà vu all over again” a second recession even before we’re fully recovered from the first.

The jolt to this country’s solar plexus might have calamitous, unanticipated consequences. The anger from constituents toward those who blocked a resolution could be surprising and even unprecedented.

Republican conservatives have most to lose. Defending the right of millionaires to avoid new taxes is not a winning position with the general public. Refusing to compromise turns off ordinary voters, especially when they are the ones who end up suffering.

If Obama and Boehner push a settlement through a reluctant Congress, Maryland still gets hit hard. Federal budget cuts are coming in one form or another. What’s in doubt is the size of the reductions, which will ripple through the state economy.

But going over the cliff will be far worse for Marylanders and for citizens of every other state in the union.


Last week’s bitter announcement that another major manufacturing icon was going out of business — the huge Sparrows Point steel-making plant in Baltimore County — is another dagger in the heart of American manufacturing.

For Maryland it is a reminder that good-paying manufacturing jobs are fast fading. Cheap foreign competition and unreasonable demands from unions signaled the end.

That means you can add 2,500 more workers to the state’s unemployment rolls. Few have the skills to shift easily to another job — if there were any out there.

Once upon a time, the Sparrows Point complex was the largest steel mill in the world, employing 35,000 workers at its peak. But technological and market changes has made the aging plant obsolete.

It is being sold off in pieces for scrap — or used parts in the case of the newest mill. Vulture capitalists bought the plant and they are acting exactly like the name suggests — feasting off the carcass.

The good news is that eventually most of this land will be redeveloped, though that could take a decade.

About 300 acres should wind up in the hands of the Maryland Port Authority, just in time to take full advantage of the widening of the Panama Canal in a year or two.

The port, which is on an incredible roll, needs more waterside cargo space. Sparrows Point has deep-water berths and a short-line railroad. In quick order, the port could turn that now-vacant land into a huge plus for the state.

But it may take pressure from O’Malley and other leaders to pry this land away from the vultures at a reasonable price. It would be a rare silver lining in this sad local story.

Barry Rascovar is a political columnist and a communications consultant. He can be reached at