Caprice Jones likes working at Peoria Packing Ltd. in the West Loop but is worried about future tax increases and the level of government debt.
The U.S. budget deficit grew by $120 billion in October, a 22 percent increase from September and a worse showing than economists were expecting. While operating in the red is considered business-as-usual for the government, the report further intensified the debate about how to rein in the country’s debt and has many Chicagoans concerned about government spending.
If Congress and the Obama administration cannot reach an agreement before January, the U.S. economy is poised to go over a ‘fiscal cliff,’ an automatic penalty of taxes and spending cuts that both political parties agreed to previously.
“As a single mother, I’m very concerned about the fiscal cliff,” said Caprice Jones, a cashier at Peoria Packing, Ltd. on West Fulton Market. In particular, she pointed to the Bush-era tax cuts, which are set to expire. “The Bush tax cuts helped a lot of people out and it’s going to be hard to get by with increased taxes,” said Jones. However, those cuts added $1.6 trillion to the federal deficit between 2001 and 2011, according to the non-partisan Congressional Budget Office.
Economists agree that going over the fiscal cliff is likely to send the economy into another recession. According to the CBO, the combination of tax increases and spending cuts would result in a 9.1 percent unemployment rate and continued shrinking of the gross domestic product, the key measure of U.S. economic activity.
Other Chicagoans worry that the fiscal cliff will affect their future retirement plans. Dan Oliver and Sergio Pana are members of International Brotherhood of Teamsters who work at Roscoe, a Chicago uniform company. They are worried that their pensions will take a hit even as the politicians who helped create the current situation will escape relatively unscathed.
“It’s a little eye opening how much politicians spend in campaigns and how much they make in their salaries,” said Pana. The $1.6 billion spent on the elections was upsetting, he said.
Oliver said he was more concerned about the amount of foreign aid that the U.S. hands out when the country itself is in debt: “I don’t understand why we help out so many countries when we have so many people in poverty here,“ he said.
Many small business owners recognize that while they have some control over their affairs, much of their success is determined by the general economic climate. Samuel Kamur, a cab driver who emigrated from India, says the transparency in government affairs makes a difference.
“We know who the elected officials are here and they respond to requests. Even if the economy is bad, at least we know the situation,” said Kamur. The recession has taught him to control spending and save up in order to get through difficult times, he added.
A few business owners felt optimistic about their finances even if they weren’t enthralled about what was happening at the national level. Architect Richard Kasemsarn has seen business picking up lately with new projects going forward. “In a bad economy, we’re the first to get laid off and the last to get hired,” said Kasemsarn. He felt that the sensationalism about the “fiscal cliff” actually might help government officials come to an agreement more quickly.
Standing in the middle of a bustling lunch crowd at one of his popular restaurants, Donald Madia, co-owner of trendy eateries such as Blackbird, Avec, and Publican, says he doesn’t pay much attention to the deficit situation.
“If I concentrate on making my guests happy, then I don’t need to worry about the Dow,” said Madia.