Congress Returns with Fiscal Cliff Rapidly Approaching­­

With the results of last week’s elections (mostly) tallied, Congress returns to work to begin the lame-duck session this week. And just like the lame-duck session at the end of the previous Congress, some major issues are on the table.

In addition to the expiration of the 2001 and 2003 tax cuts, known as the “Bush Tax Cuts,” Congress will face another vote to raise the debt ceiling and take action on last year’s Budget Control Act-mandated sequestration, known collectively as the fiscal cliff, which will be catastrophic for states if it is not rectified.

If Congress fails to deal with sequestration, states will face major cuts. According to a study by Federal Funds Information for States, although Medicaid is largely exempt from cuts, some other crucial and expensive programs that states participate in--such as Title I grants to local education agencies, basic state grants for special education, the Head Start program and WIC funding--all would be subject to cuts.

Other programs that do not come with as high of a price tag are on the chopping block, and that also could hurt states. These programs include the State Homeland Security Grant Program, Justice Assistance Grants and the Clean Water State Revolving Fund. In total, states will see $5.3 billion in cuts if Congress does not take action to avoid sequestration; that doesn’t include defense cuts.

This is not the end of the trouble, either. If Congress fails to raise the debt ceiling, the U.S. credit rating would almost certainly take a hit, bringing state and municipal credit ratings down with it.

The nonpartisan Congressional Budget Office reported last week that if Congress fails to raise the debt ceiling and avoid sequestration, the U.S. will plunge back into a recession. But if the fiscal cliff is avoided, 3.4 million jobs would be preserved.

Let’s hope this year’s lame-duck session does not end in a recession, with higher unemployment and more state budget crises.

It’s time for Congress to act.