Fiscal cliff situation could have impact on Wisconsin's economy

MILWAUKEE -- As fiscal cliff negotiations continue in Washington, D.C., Wisconsin's governor and other key lawmakers say going over the fiscal cliff would have an impact on the state of Wisconsin's finances.

This week, Gov. Scott Walker will meet with President Barack Obama at the White House to discuss the impact of the fiscal cliff situation on the states. Gov. Walker says he has some advice for Washington: act more like Wisconsin.

"We took a $3.6 billion deficit, balanced it two consecutive years, and  for the first time ever, set money in the rainy day fund," Gov. Walker said.

Gov. Walker says the looming fiscal cliff could stifle job creation in Wisconsin. 

"I'm scared to death that people in Washington are going to do something -- in either political party -- that would slow down the already slow economic recovery," Gov. Walker said.

The fiscal cliff involves a mix of spending cuts and tax increases that kick in automatically if lawmakers don't reach a debt reduction deal by the end of the year.

"This heightened rhetoric -- that there's this cliff we have no control over, this is a man-made problem. I think it can be solved with people getting in a room and having grown up conversations," state Sen. Chris Larson (D - Milwaukee) said.

Going over the fiscal cliff would mean income tax increases for almost all Americans -- a prospect state Rep. Dan Knodl (R - Germantown) says would have a devastating impact on the state budget.

"It's going to be a factor. If the economy nationally decreases, it's going to affect us, and we have to adjust with it," Knodl said.

Going over the fiscal cliff would also trigger a trillion dollars of spending cuts, with half coming from the defense budget. So what would it mean for Wisconsin -- a state with no major military installations?

"This is one of those odd instances where being low on the list in terms of the amount of federal money that comes back to the state might actually be a benefit for us, because we have some of the least to lose," Gov. Walker said.

One area of deep concern for Gov. Walker is the potential cuts to Medicaid.

State Sen. Jon Richards (D - Milwaukee) says Gov. Walker should be seeking more federal dollars -- not calling for cuts.

"If they just cut into the existing system, it would be very, very troubling. Making sure we use every federal dollar available to us to make our budget work," Richards said.

Wisconsin companies like Tailored Label Products in Menomonee Falls say the fiscal cliff situation is bad for business. 

"We're focused on our employees, and focused on making sure we're successful in our little circle of life, and things outside of our control really are a distraction," President and Co-Owner of Tailored Label Products Mike Erwin said.