White House Warns States of Dire Impact of Sequester
Business + Economy

White House Warns States of Dire Impact of Sequester

iStockphoto/The Fiscal Times

After weeks of speculating about the impact of the automatic budgets cuts due to take place this Friday, we now have a glimpse of what will happen state by state—and it isn’t a pretty picture.

New York, New Jersey and a handful of other Northeastern states that bore the brunt of Hurricane Sandy would be among the biggest losers if $85 billion of scheduled across-the board cuts in domestic and defense spending are allowed to kick in on Friday, according to a new White House analysis released over the weekend..

New York for example would lose approximately $42.7 million in funding for primary and secondary education, putting around 590 teacher and aide jobs at risk. Head Start services would be eliminated for approximately 4,300 children. The state would lose about $780,000 in Justice Department assistance grants, and 12,000 civilian Defense Department employees likely would be furloughed.

New Jersey, which sustained the worst flooding and storm damage in the hurricane last October, stands to lose $11.7 million in federal funding for primary and secondary education that would put the jobs of 160 teachers and aides at risk, while Head Start services would be eliminated for about 1,300 children, according to the analysis. Moreover, about $4.8 million in funding to ensure clean water and clean air would be cut, $336,000 in justice assistance grants would be eliminated and about 11,000 civilian Department of Defense employees would be furloughed.

For the defense department, a furlough could amount to two weeks without pay, but no one loses his job.  And none of the essential security forces are affected.  

Military readiness in Virginia – a big defense industry state and home to Republican House Majority Leader Eric Cantor --would take a beating, as approximately 90,000 civilian Pentagon employees would be furloughed, reducing gross pay by around $648.4 million. Meanwhile, Army base operation funding would be cut by about $146 million, Air Force base funding would drop by about $8 million and the Navy would cancel the maintenance of 11 ships in Norfolk, defer four projects at Dahlgren, Oceana and Norfolk, and delay other modernization and demolition projects.

Other states with large military and defense industry footprints would suffer cuts and downsizing as well. In California, about 64,000 civilian defense department employees face would face furloughs that would cost the economy $399 million, while in Texas, approximately 52,000 civilian Department of Defense employees would be furloughed, reducing gross pay by around $274.8 million in total.


With the deadline for sequestration only five days off and no signs of a compromise between President Obama and congressional Republicans, the White House is stepping up its public relations campaign to try to force the GOP to compromise on an alternative  package of spending cuts and additional tax revenue by closing tax loopholes for corporations and the rich.

Sen. Tom Coburn, R-Okla, appearing yesterday on “Fox News Sunday,” said the administration was setting up a “straw man” by overstating the economic and budgetary consequences of the across the board cuts, even while he objects to the practice of across the board budget cutting that fails to take into account the relative value of programs.

“It is a terrible way to cut spending, but not to cut 2.5 percent over the total budget over a year when it is twice the size it was 10 years ago? Give me a break," Coburn said. "We see all these claims about what a tragedy it's going to be."

In recent days, Obama has repeatedly warned of impending fiscal disaster if the cuts take place, including long delays at airports, layoffs of firefighters and other first responders, sharp cutbacks in school aid Head Start programs and massive layoffs and furloughing of 800,000 civilian Defense Department employees and contractors.

Until recently, the Obama administration has been reluctant to provide detailed information on the likely impact of sequestration, except for a massive report last September by the Office of Management and Budget detailing the possible impact of the cuts on departments and agencies, including a 9.47 percent reduction in defense. In recent weeks, however, administration officials have testified at length on Capitol Hill about the likely impact of the cuts, and now the White House is attempting to rally support of state officials by offering a 50-state analysis of where the cuts and savings would be made.

“There is no question that we need to cut the deficit, but the President believes it should be done in a balanced way that protects investments that the middle class relies on,” the White House said in a statement accompanying the state by state analysis. “The President’s plan meets Republicans more than halfway and includes twice as many spending cuts as it does tax revenue from the wealthy.  Unfortunately, many Republicans in Congress refuse to ask the wealthy to pay a little more by closing tax loopholes so that we can protect investments that are helping grow our economy and keep our country safe.”

Meeting in Washington over the weekend for the National Governors Association, state chief executives from both parties voiced growing concern about what they viewed as the mindlessness of the cuts and the uncertainty of the fiscal picture.

“The uncertainty of sequestration is really harming our states and the national economy,” said Gov. Mary Fallin of Oklahoma, a Republican and the vice chairwoman of the association, according to the New York Times. “Don’t balance the federal budget on the backs of state government.”

But Republicans staunchly oppose any plan that includes more than the $700 billion of tax revenue approved as part of the fiscal cliff deal on New Year’s Day. Many charge that the president has grossly exaggerated the impact of the $825 billion of cuts, and appear ready to let the cuts begin kicking in at the end of the week.

For the remainder of fiscal 2013, the sequester will include $42.7 billion in defense cuts – a 7.9 percent reduction; $28.7 billion in domestic discretionary cuts – a 5.3 percent reduction; $9.9 billion in Medicare provider cuts – a 2 percent reduction; and $4 billion in other mandatory cuts.)