A defense-industry group unveiled a report warning so-called sequestration budget cuts could lead to the loss of more than 2 million jobs yesterday as Democrats and Republicans clashed on Capitol Hill about preventing the cuts partly with new revenues.
In a report commissioned by the Aerospace Industries Association (AIA), George Mason University professor Stephen Fuller predicts just the first year of sequestration cuts–which, if implemented next January, would cut defense and non-defense spending by $1.2 trillion over a decade–would lead to the loss of 2.14 million U.S. jobs. Fuller predicted last October that the defense portion of the sequestration cuts would cost the economy 1 million jobs. His new analysis, though, includes a more-thorough examination of Pentagon cuts as well as reductions to other federal agencies subject to the non-defense sequestration reductions.
AIA President and CEO Marion Blakey called the potential loss of jobs an “unemployment Armageddon.”
At a press conference with politicians from both sides of the aisle, Blakey noted Fuller’s estimate that sequestration would add an additional 1.5 percent to the national unemployment rate. She argued Congress should be “on fire to fix the problem.”
At the same event, in a Capitol Hill hotel, Sens. Jeanne Shaheen (D-N.H.) and Kelly Aoytte (R-N.H.) described slightly different ways to prevent sequestration. The politically-unpopular reductions, which would reduce planned defense spending by $500 billion over nine years, are set to start next January thanks to the Budget Control Act of 2011.
Ayotte called for lawmakers to craft an alternate plan before the November elections to replace at least the first year of the sequestration cuts, before they reach a broader plan on the whole decade’s worth of reductions. She, like Sens. John McCain (R-Ariz.) and Lindsey Graham (R-S.C.), has said she could support some limited revenues other than tax increases. Shaheen, meanwhile, said she would prefer lawmakers agree on a long-term and comprehensive solution before the end of this year with varied revenues including those derived from tax reforms. She pointed to revenue-generating proposals from commissions including one led by Erskine Bowles, chief of staff to former President Bill Clinton, and Alan Simpson, a former Wyoming Republican senator.
Meanwhile at the Capitol, former Vice President Dick Cheney met with Republican senators yesterday and warned about the harm the sequestration cuts would wreck on national security, according to attendees in the closed lunch. Cheney also met with GOP House leaders.
Senate Majority Leader Harry Reid (D-Nev.) and Minority Leader Mitch McConnell (R-Ky.) also traded barbs in comments to reporters. Reid called for a “balanced agreement” to replace sequestration that includes tax increases. McConnell slammed Democrats’ negotiating strategy and insistence on ending tax cuts for the wealthies Americans.
Lawmakers including the heads of the Senate Armed Services Committee (SASC) have been meeting behind closed doors about how to craft an alternate plan to cut the federal deficit to replace the so-called sequestration cuts. Those politically-unpopular reductions, of $1.2 trillion in defense and non-defense spending over the next decade, were triggered
George Mason’s Fuller, meanwhile, said his earlier report on the economic impact of the sequestration cuts looked only at the result of spending cuts on weapon-system buying and defense research-and-development efforts. The newer analysis released yesterday also calculates the impact of the cuts on Pentagon civilian payroll and outlays for operations and maintenance, as well as on other federal agencies beyond the Pentagon that would face sequestration cuts. For example, the report estimates 48,000 healthcare jobs would be lost. His new report pegs the defense sequestration cuts would spur the loss of 1.09 direct, indirect, and “induced” jobs. Induced jobs are those lost because they depend on spending of the other workers who lose their positions.