Going over the so-called fiscal cliff could be devastating for a state that already can't pay its bills. Kim Vatis reports.
Illinois' Chief Financial Officer on Friday gave a stern warning: should the nation go over the so-called fiscal cliff in the new year, the consequences would be devastating for Illinois.
"At some point, we won't be worth paper that the word Illinois is written on," Comptroller Judy Baar Topinka said from her Chicago office.
She estimated a minimum $1 billion fallout to state coffers.
"My biggest fear is that we're going to go into a recession and any gains we have slowly made to dig ourselves out of the fiscal hole that we've been in are going to get wiped out," she said.
Topinka said the 2 percent hike in Social Security payroll taxes alone would cost Illinois residents roughly $6 billion in take-home pay. Along with higher income taxes, she believes that will translate into $500 million less in desperately-needed state sales tax revenue.
The state also stands to lose $300 million in federal grants for education, social services and agricultural subsidies.
"I can't wait until folks start going off to the food store and seeing what the prices are going to be, because that subsidy basically gave it a false bottom," she explained. "It is not inconceivable to see $7 gallons of milk."
Already, consumers seem to be thinking about their paychecks in 2013 and how the self-imposed tax hikes and spending cuts will squeeze everyone.
"I guess you've got to tighten your belt even more and grin and bare it and then keep score on what these politicians are doing," said resident Mary Freeley.
On Friday afternoon, just four days before the deadline, President Barack Obama said he was "optimistic" that a deal could still be reached. But he warned: the patience of the American people is waning.