Thursday, July 19, 2012
New Report on Sequestration
The Air Force Magazine’s Daily Report online spotlights a new study by the Aerospace Industries Association (AIA release) that paints a dramatic picture of sequestration’s economic impact. In 2013 alone, the nation stands to lose 2.14 million jobs, $215 billion in gross domestic product, and $109.4 billion in the personal earnings of the American workforce if the Budget Control Act's sequester takes effect in January, 2013.
“For the defense sector, which would absorb some $500 billion of sequestration's $1.2 trillion in mandated federal budget cuts, this would mean a loss of more than one million jobs, $86.5 billion in GDP, and $59.4 billion in workers' personal earnings,” states the study.
"The results are bleak, but clear-cut," said Dr. Stephen Fuller, economist, George Mason University, who led the research, at the July 17 press conference unveiling the report in Washington, D.C. "The unemployment rate will climb above 9 percent, pushing the economy toward recession and reducing projected growth in 2013 by two-thirds.”
Republicans and Democrats on the House Armed Services Committee each blamed the other for the looming budget sequestration.
"In addition to the issue of jobs, I worry that the cavernous silence from the President will lead many to exit the [defense] industry or to walk away from capital investments that are in the best interests of our troops," said HASC Chairman Rep. Buck McKeon (R-CA) during the hearing called to discuss sequestration's effects on the defense industry.
Ranking Member Rep. Adam Smith (D-WA) countered by saying Congress must first acknowledge that it won't be solving the federal budget deficit anytime in the near future. "We're going to have structural deficits for awhile," said Smith. "Our role is to get those deficits under control so that they are manageable. But we can't hold hostage steps (more revenue and strategic cuts) that will do that."