Sequestration Will Cost 2.14 Million Jobs, Study Says
July 17, 2012
Severe, across-the-board budget cuts slated to kick in January 2013 would cause a sharp uptick in both federal and private sector unemployment, according to an academic report commissioned by the Aerospace Industries Association and released Tuesday.
According to the study of the economic impact of the 2011 Budget Control Act on the Defense Department and other federal agencies, the budget-cutting tool known as sequestration would reduce the nation's gross domestic product by $215 billion, decrease personal earnings of the workforce by $109.4 billion and cost the economy 2.14 million jobs—with the most severe impact coming in 2013 in what is shaping up to be a continually weak economy. Sequestration will trigger automatic cuts on Jan. 2, unless Congress can agree on an alternative savings plan.
The projections, compiled by George Mason University economist Stephen Fuller, were unveiled at a Capitol Hill news conference attended by two senators and two big-city mayors, with the lawmakers' expressing opposing views on the key question of whether new tax revenues are needed in crafting a long-term and bipartisan deficit reduction plan.