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'Fiscal cliff' deal brings some relief to California

SACRAMENTO — The deal in Washington to avoid the "fiscal cliff" will bring a reprieve to California's slowly rebounding economy, but uncertainty remains in part because Congress delayed action on federal spending cuts.

The agreement helps California avoid sliding back into recession, H.D. Palmer, finance spokesman for Gov. Jerry Brown, said Wednesday. But economic forecasters said the two-month delay on the sequestration cuts could lead businesses to delay hiring or investments.

"To the extent that this agreement averts a national recession — and the revenue loss associated with it — then we will have dodged a bullet," Palmer said a day after Congress reached the deal.

One immediate benefit of the agreement is about 400,000 jobless Californians will receive extended unemployment benefits. The legislation also stops a 27 percent reduction in Medicare fees paid to doctors, and keeps in place a higher child tax credit as well as tax credits for college tuition, clean energy and small businesses.

While it raises taxes on the wealthy, the deal prevents most tax increases on the middle class. All taxpayers will be subject to an additional 2 percent Social Security payroll tax because Congress allowed that tax holiday to expire.

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