Is The Fiscal Cliff Really Behind The Mass. Budget Gap?

Wednesday morning, President Obama addressed to the Business Roundtable, an organization of top CEO. He described to them all that would be possible if the Washington stepped back from economic edge:

We've got some tough spending cuts, we reform our entitlements, we have modest revenue increases. You get business certainty. You do what you do best: Innovate, invest, hire workers, make profits, do well by your shareholders, and grow America.

On Tuesday, Gov. Deval Patrick echoed the president's sentiments as he announced the expected $540 million dollar budget shortfall and laid out his plan to close the budget gap. The governor said the lack of resolution with fiscal cliff negotiations have forced Massachusetts into a budget crisis:

 By all accounts, that uncertainty and resulting slowdown in economic growth is the direct cause of our budget challenges. Economists agree that the fiscal cliff is keeping a tremendous amount of private capital on the sidelines. Business leaders I meet confirm that fact. The private sector will be unwilling to make the kinds of investments that create jobs, grow state and federal tax revenue collections, and contribute to a lasting economic recovery until Congress and the president come to terms on a solution.

So how will the Mass. economy fare in the coming months? Also on Wednesday, The New England Economic Council released their economic forecasts for the region. For the Bay State, the NEEC found:

The Massachusetts economy is in the fourth year of the expansion that began in the summer of 2009. Although real gross state product is 4.5% above its pre-recession peak, and 87% of the 143,000 jobs lost in the recession have been regained the state’s economic growth slowed in third quarter of this year, and growth is expected to continue to be slow for the last quarter of this year and first quarter of next.

We take a close look at the $540 million dollar budget shortfall, and explore claims that stalled negotiations in Washington have forced Massachusetts to make cuts to the state budget.

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