Math Starting to Add Up: Expect Big Hit to the Economy with Sequestration
By John Rasmussen
Posted: Feb 22, 2013
On March 1st, the U.S. version of Euro austerity kicks in with congressional mandated budget cuts and tax increases to shave the national debt by over a trillion dollars within the next decade. The cuts will be divided nearly equally between defense and non-defense spending and while both the White House and Congress feel 'Sequestration' will be potentially devastating to the economy, there appears to be no consensus on how to avoid it.
What does this mean job wise?
The Pentagon, which needs to come up with 13% across the board cuts, has already begun laying off 43,000 temporary workers. Last month, they announced they were looking at furloughing ALL of its 800,000 civilian employees for at least a month this year to make up for the shortcoming created by the auto-cuts.
One study last year estimated that there could be a loss of 907,000 jobs that are connected directly or indirectly with defense in 2013 alone. This same study stated that defense employment losses would reach 1.2 million in 2014, before leveling off.
In non-Defense, the picture doesn't get any rosier. The Energy Department has notified its employees that it may have to place workers on temporary furloughs and slash "vital programs" if across-the-board budget cuts take place.
Looking at education, the estimate is that nearly 80,000 Head Start, elementary, secondary and support personal would be gone this year. With cuts in Medicare, nearly 500,000 jobs would not be able to be supported. These cuts would include nurses, therapist, support workers, vendors etc.
'Trickle down' theory?
These numbers do not account for the stores and restaurants that these people would normally shop and eat at. These numbers don't include the travel agencies, auto dealerships, day spas or movie theaters. These businesses, plus many more, will feel the full effect of these cutbacks.
When one throws those numbers in, what effect will sequestration have on the rebounding housing market? What about a community's tax base, which in turn affects the hiring or even keeping of fire, police and other emergency personnel?
While on paper they might not reach the 5 million that were let go in 2009, these are significant numbers that are poised to hit an already fragile economy starting in the next couple weeks.
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