'It's a genuine catastrophe that's waiting to happen,' says industry leader Marion Blakely. | REUTERS
Defense org: Sequester damage huge
A defense industry trade group warned Tuesday that the sequester cuts set to take effect next year could cost the country more than 2 million jobs and $215 billion from the nation's GDP in 2013 alone. The blow to the economy could add 1.5 percent to the jobless rate and take $109.4 billion from personal wages earned by workers, according to a new report commissioned by the Aerospace Industries Association. It examined how the sequestration would affect defense and domestic programs. Story Continued Below
"If [the cuts] are allowed to occur as currently scheduled, the long-term consequences will permanently alter the course of the U.S. economy's performance, changing its competitive position in the global economy," read the report, conducted by Stephen Fuller of George Mason University and Chmura Economics and Analytics. Examples of the job losses include 48,000 in the health care sector, nearly 99,000 in construction and 473,000 jobs in manufacturing. Sequestration will also deal a significant blow to the federal workforce, with more than 617,000 of those jobs at stake, the report said. Defense jobs account for just more than half of the total projected 2.14 million job losses. The negative effects could ripple further into the economy, with consumers losing confidence and holding back spending, or businesses hesitating to make investments or hire employees. The most damaging consequences of the sequester, which spans over a decade, comes in the first year, Fuller said in the report. California, the most populous state, would take the biggest hit in job losses from the spending cuts, with Virginia - a key swing state this fall with a large swath of both defense industry and federal workers - not far behind, the study said. Texas, the District of Columbia, Maryland, Florida, Pennsylvania, New York, Massachusetts and Georgia round out the list of top 10 states and districts affected. "All told, it's equal to the population of Houston," said AIA President and CEO Marion Blakey. "It's a genuine catastrophe that's waiting to happen." AIA is among a litany of groups warning of damage to the U.S. economy if the sequester cuts go forward. For instance, the nonpartisan Congressional Budget Office has said the so-called "fiscal cliff" - whose key components are the sequestration and the expiration of the Bush-era tax cuts at the end of the year - could nudge the nation into a recession in early 2013. Although lawmakers want to avoid the automatic spending cuts, partisan differences over government spending and the need to raise revenue through taxes have stymied Congress and a deal has so far been elusive. Certain safety net programs such as Social Security and Medicaid aren't subjected to the sequester, and cuts to Medicare are capped at 2 percent and won't affect benefits. Share on Facebook
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