The pressure is mounting for a solution on the fiscal cliff to be resolved at the end of the year with civic rights supporters asserting Latinos are likely to feel the effects immediately.
The argument made by the National Council of La Raza (NCLR) indicates that because Latinos face a higher unemployment rate—10 percent—the “struggle to stay afloat might become unbearable.”
“We’re doing Hill visits with members on both sides of the aisle to talk about issues like the fiscal cliff—like all Americans we know that our Latino voters went to the polls with these issues in mind, but especially with the economy on their mind,” Janet Murguia, NCLR president explained during a conference call Wednesday.
“They overwhelmingly favor a fair, balanced and shared approach to deficit reduction. This is also not the time to raise taxes on working and middle class families.”
Speculation dictates that Congress might go over the fiscal cliff, which means automatic tax rates will rise for all Americans next year. For those with a taxable income of $43,500,the tax rate would go up by 1.5 percent. Likewise, the highest tax rate would increase to 24.5 percent for the top 1 percent of the highest earners, according to data cited by the George Washington University.
President might be willing to discuss entitlement reforms
Both Democrats and Republicans have pushed proposals that would avert such a scenario, yet negotiations are still frozen on political principles.
The president indicated a “quick deal” could be approached if the Republican Party compromises on raising tax rates for the top two percent or those making more than $250,000 a year, in exchange for entitlement reforms.
Jason Furman, Assistant to the President for Economic Policy and the Principal Deputy Director of the National Economic Council, explained that the president is focused on “balanced deficit reduction” and that’s not likely to be reached unless higher tax rates on higher-income households are enacted.
“Accomplishing that is central to making sure that the middle class or the most vulnerable are not going to be blamed for deficit reduction, which is something that he wouldn’t allow to happen,” Furman told VOXXI.
Democrats have equally indicated that they don’t want entitlement reform cuts namely Medicare and Medicaid. Rumors seem to signal that Republicans on the other end might become more flexible on raising tax cuts for the two percent of higher income earners, but that might not come without spending cuts on entitlements. News reports indicate that it’s still unclear how far the president would be willing to move on entitlements in his ongoing negotiations with Boehner.
Automatic cuts would affect unemployment, consumer spending and education
Jennifer Ngandu of NCLR also reinforced that such a conversation shouldn’t necessarily mean more cuts.
“We think it’s important to have a discussion on entitlement reforms, but that shouldn’t automatically go towards the direction of cuts,” said Ngandu.
Furman later clarified that their position on Medicaid and matching grants to states has changed in light of the Supreme Court decision on the Affordable Care Act and that will be one provision the administration will be evaluating.
The Obama administration also reiterated that a Latino family of four or a married couple with two children earning between $50,000 and $85,000 could see an income tax rise by $2,200 if a deal on the Bush tax cuts is not reached. There are an estimated 3.6 million working Hispanic families and 6.3 million Hispanic American children that would continue to benefit under the earned income tax credit and child tax credit plans, but that could also be potentially reduced.
Both plans are refundable tax credits that help lower income working families and individuals. The amount of the credit varies depending on the level of income and the number of dependents that are supported.
Other areas that could potentially see eventual reduction are cutbacks on charitable deductions that reinforces non-profit sectors. In addition, the cuts would also affect Title 1 education programs in addition to early childhood education programs such as Head Start, which could affect an estimated 96,000 fewer children that are served.
“We know that 37 percent of Latinos attend high poverty schools and so that’s approximately 1.8 million fewer low income public school children that could be receiving reading and math help,” said Julie Rodriguez, Associate Director of the White House Office of Public Engagement and granddaughter of Cesar Chavez.
“The impact potentially to Pell grants—40 percent of Latino college students receive the support of the Pell grants—these are general estimates at this point, but I think it’s indicative of the fact that the Latino community has a lot at stake in these conversations and in these debates,” she said.
Xavier Becerra says Latinos aspire to be part of the middle class
If the sequester hits, there will also be automatic cuts toward new job training programs that would likely affect Latino youth. Those who are between 16 and 19 years of age are currently facing an unemployment rate of 28.9 percent, according to the Department of Labor (DOL).
The “fiscal cliff”—the combination of tax increases and deep budget cuts that will automatically take place at the beginning of the New Year—would return the unemployment rate to more than 9 percent nationally, according to the Congressional Budget Office (CBO). The national unemployment rate stands at 7.8 percent.
This comes in light of the fact of spurring consumer confidence recorded on Black Friday. The Pew Hispanic Center also noted that Hispanics have grown more satisfied with the nation’s direction and more confident in their finances since 2011, according to a survey conducted on November 2.
Rep. Xavier Becerra, (D-Calif.), who was recently elected as chairman to the House Democratic Caucus in the 113th Congress and serves in the Ways and Means Committee, reassured that he is in support of strengthening entitlements including social security and health care. Thus, it can’t be sacrificed.
“Latinos are part of the aspiring class. We aspire to be in the middle class. You should feel like you’re in the middle of America, not on the edge,” he said.
Becerra then spoke about the resilience of the Latino community to confront the fiscal cliff.
“The reality is that as much as people are crying that we may go over a fiscal cliff and ‘oh this could be doomsday,’ the reality is for many of our families, we’ve seen far harsher times,” he said. “While we confront those who say the sky is falling, the reality is we for the longest time have kept the sky above America and we’re going to continue to do it.”
This story was originally published by Voxxi under the title "As Congress Negotiates Fiscal Cliff, Latinos Likely Affected."