Keep an eye on Congress

In general, Alaskans tend to be more attuned to what’s going on in Washington, D.C., than people from other parts of the country. Perhaps it’s because Alaska receives some of the highest per-capita federal funding in the nation, or maybe it’s just because following politics is a popular pastime during the long, cold winter.

Either way, we’ll want to pay extra-close attention to what’s happening inside the beltway over the next couple of months — and read the fine print on the bills that Congress has passed over the last few days.

Since the November election, Congress’ primary focus has been on the fiscal cliff — that combination of spending cuts and tax increases that was to go into effect on Jan. 1. In a last-minute deal, Congress addressed tax increases, but put off tough decisions on spending cuts for a couple more months.

However, while most taxpayers were spared an income tax rate increase, just about everybody will still end up paying more in taxes, in particular due to an increase in payroll taxes. Alaska workers need to be aware that there will be a little less money in the paycheck in the coming months — about $500 for a worker earning $50,000 — and need to adjust the family budget accordingly.

With tax increases addressed for the time being, the more difficult part of the equation — federal spending cuts — becomes the focus. Again, Alaskans need to pay close attention here as spending by the federal government makes up a large portion of the Alaska economy. Reductions in spending are going to hit close to home, and are going to hurt, whether it means a reduction in the federal workforce, or cutbacks to federal programs.

In a recent conversation with the Clarion editorial board, Sen. Lisa Murkowski said that the most significant stimulus that Congress can provide for the American economy is certainty. The fiscal cliff was designed to force Congress to provide that certainty. It only partially worked, which leaves us left with no choice but to proceed with caution in the new year — and continue to keep a close eye on Washington, D.C.

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