JEFFERSON CITY, Mo. (AP) - A new report says Missouri's economy and budget stand to take a big hit if officials in Washington don't reach a deal to avert the so-called "fiscal cliff."
The Federal Funds Information for States says Missouri could lose $1 billion of defense spending on contracts and military institutions if federal spending cuts take effect in the new year.
With a current standoff between Congress and the President, other groups are working on ways to step in and help should they not reach a deal by the end of the year.
The Federal Reserve meets this week and could try to soften the blow from the tax increases and spending cuts of the fiscal cliff if Congress can't reach a budget deal.
The Fed is expected to announce a new bond-buying plan to support the U.S. economy by further reducing long-term interest rates and encouraging borrowing by companies and individuals.
But Chairman Ben Bernanke warned last month that the Fed's actions wouldn't rescue the economy in a fiscal cliff scenario.
If higher taxes and government spending cuts were to last for much of 2013, most experts say the economy would sink into another recession.
Once its two-day policy meeting ends Wednesday, the Fed is likely to say it will start buying more long-term Treasurys to replace a program that expires at year's end.