If a congressional “super committee” fails to reach agreement on reducing federal spending, the impasse would trigger automatic defense budget cuts that would cost Virginia nearly 123,000 jobs.
That is one conclusion of a study looking at the ramifications of the budget negotiations being conducted by a 12-member, bipartisan congressional committee. Under the debt ceiling agreement reached in August, the committee is charged with finding additional cuts to the federal budget. Otherwise, broad-based cuts will automatically take effect.
The study, conducted for the Aerospace Industries Association by Dr. Stephen S. Fuller, director, Center for Regional Analysis at George Mason University, and Economic Modeling Specialists Inc., predicts dire consequences for the state and national economy if the automatic defense cuts take effect. “Our analysis reveals bleak outcomes for both the defense industry and the economy as a whole if the budget sequestration trigger is pulled, and $1 trillion is cut from defense,” Fuller said in a statement.
He predicts more than 1 million job losses nationwide, including 122,800 in Virginia. Only California, with 125,800 job losses, is expected to be hit harder by the defense cuts.
The study says that the defense cuts will raise national unemployment by 0.6 percent and lower national gross domestic product (GDP) by 0.25 percent in 2013.
“The multiplied impact of aerospace and defense workers losing their job is very simple – purchase of consumer goods goes down overnight, homes become unaffordable and the housing crisis is compounded, and so forth,” Fuller said..
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