This week is Tax Fairness Call-in Week! Use the toll free number 888-744-9958 to call your elected officials in Washington to demand they end the Bush tax cuts for the wealthiest 2%. The article below shares what's at stake…
John Reid Blackwell, Richmond Times Dispatch
July 18, 2012
Virginia could lose 207,571 jobs and nearly $10.7 billion in labor income from federal spending cuts starting next year if Congress fails to resolve the looming budget crisis, according to an analysis released Tuesday.
Virginia ranks second only to California in estimated job losses from the automatic budget reductions, which are scheduled to kick in Jan. 2 unless Congress acts.
Texas would take the third-biggest loss, according to the analysis conducted for the Aerospace Industries Association, a trade group for manufacturers that could lose billions of dollars in federal contracts.
"It's a pretty big hit" for Virginia, said Stephen Fuller, an economist at George Mason University who conducted the analysis along with Chmura Economics and Analytics, a research firm in Richmond.
The researchers said the automatic spending cuts will cost the economy more than 2 million jobs, from defense contracting to border security to education. The cuts also would reduce the nation's gross domestic product by $215 billion next year while consumer confidence would plummet.
"If they 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," the report said.
"Clearly, such a large cut in defense spending along with the increase in taxes mandated by the Budget Control Act will push the nation into recession during the first half of 2013. The Richmond region and state of Virginia will feel that recession as well," said Christine Chmura, president of Chmura Economics and Analytics.
The analysis is similar to other cautionary reports that have emerged in recent months from independent organizations that analyze federal spending.
All the reports carry a degree of uncertainty, as the government hasn't spelled out where it would make the cuts.
In Virginia, the spending cuts likely would hit Northern Virginia and Hampton Roads the hardest because of the concentration of defense-related and federal contracting jobs in those areas. Still, the entire state would suffer losses, Fuller said.
The impact on Virginia also could be larger than the direct job losses in the state, Fuller said. The District of Columbia and Maryland also would lose tens of thousands of jobs. They rank fourth and fifth overall in the number of jobs that would disappear.
"A lot of those jobs are held by Virginians," Fuller said.
The report says Virginia's losses would total 136,191 jobs resulting from Department of Defense cuts and 71,380 jobs from non-Defense Department cuts.
The nearly $10.7 billion loss in income would cover $5.8 billion from Defense Department cuts and $4.8 billion from non-defense cuts.