Shoaf says small firms would suffer an even more dramatic hit from an estate-tax increase, which also is due to take effect after Dec. 31. Unless Congress approves a change, estates valued at more than $1 million would be subject to the inheritance tax, compared with a $5-million threshold now. In addition, the top estate-tax rate would rise to 55% from the current 35%. Shoaf says, "That will force a huge shift in [a firm's] productive resources to mitigating this huge increase in any 'death tax' blow."

If there is no fiscal-cliff deal, the first $109 billion of a planned $1.2 trillion in budget-sequester spending cuts over 10 years will take hold, effective on Jan. 2, 2013. Construction's share of the 2013 cuts will be $6 billion, AGC estimates. AIA says reductions in federal buildings programs alone would be about $2 billion.

Some major construction accounts are exempt from the sequester, such as Dept. of Veterans Affairs construction and programs that draw on trust funds. That includes the 98% of the $40.2-billion 2013 federal-aid highway program that is financed by the Highway Trust Fund as well as by airport construction grants and Federal Transit Administration formula grants for rail modernization and bus facilities. Connor says, "The transportation funding is reasonably well protected by these various exemptions." Her firm is concerned about cuts in new transit starts and Amtrak's capital program, she says.

The National Utility Contractors Association would be hurt by cuts in Environmental Protection Agency and Agriculture Dept. water-infrastructure funds. But even if negotiators cancel the sequester, construction spending will remain under severe pressure. NUCA CEO Bill Hillman says, "It doesn't change much for us. We still have to fight for every dollar."

Moreover, if there's no deal, the Congressional Budget Office predicts GDP will be pared by 0.5% next year, and the overall jobless rate will climb to 9.1% from 7.9% now. In a report released on Nov. 27, the Organization for Economic Cooperation and Development said, "If the fiscal cliff is not avoided, a large negative shock could bring the U.S. and the global economy into recession." Such predictions don't bode well for construction.