Automatic federal budget cuts scheduled to take place next January will cost the nation 2.14 million jobs, including more than 207,000 in Virginia, an economic study says.
The report compiled by Dr. Stephen Fuller of GMU’s Center for Regional Analysis in Fairfax in conjunction with Chmura Economics & Analytics in Richmond says the $1.2 trillion in cuts required by the Budget Control Act of 2011 will reduce gross domestic product growth by two-thirds in 2013 and raise unemployment by 1.5 percentage points, to above 9 percent.
“The Congressional Budget Office released its analyses of these impacts confirming what other independent organizations had already concluded — that if the provisions of the BCA of 2011 are implemented beginning January 2, 2013, the U.S. economy, which is still struggling to sustain its recovery more than three years after the end of the 2008-2009 recession, could be pushed into recession during the first half of 2013,” the study notes.
The Budget Control Act was the law passed by Congress last year during the debt ceiling crisis. The law set up $1.2 trillion in federal budget cuts to take effect starting next year if a 12-member, bi-partisan “super committee” could not come to an agreement on budget reductions.
The cuts now are slated to take effect because the committee failed to reach an agreement.
Virginia ranks second among the states that would be hardest hit by the cutbacks, according to the report.
Its total job loss of 207,571 jobs would include 136,191 resulting from Department of Defense cuts and 71,380 from non-Defense cuts.
California ranked first in total job losses with 225,464.
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