Sequester At A Glance: The Impact on Maryland Jobs and Economy

As our economy continues to recover, Congress must remain focused on supporting sustained growth and job creation. Unfortunately, the House has not considered any legislation to stop the sequester, putting thousands of jobs at risk and placing our economy in jeopardy – especially in Maryland, where 5.6% of jobs are federal and many more are supported directly and indirectly by the federal government.

Economists agree – the irresponsible and reckless spending cuts of the sequester could hamper our economic recovery and stall long-term economic growth if it is not addressed.

Here’s a closer look at how the sequester could harm our economy here in Maryland and throughout the country over the coming months:

In Maryland:

• According to the state Department of Budget and Management, the sequester could result in almost $100 million in federal grant reductions to state and local governments in Maryland, which could mean cuts to education, job training, housing, health and social services, and other critical investments. [Governor O’Malley’s Office]
• The Maryland Board of Revenue Estimates suggests about 12,600 jobs could be lost in Maryland.[Governor O’Malley’s Office]
• Approximately, 46,000 civilian Department of Defense employees could be furloughed in Maryland alone, reducing gross pay by around $353.7 million. [White House]
• Military installations in our state, which employ thousands of Marylanders and support thousands of private sector jobs, could experience over $114 million in spending cuts. [White House]
• Over 9,000 fewer people could receive the training and placement services needed to find jobs. [White House]
• A Washington Post Poll found that 38 percent of Marylanders and 57 percent of households with one or more federal employees say the sequester will have a major impact on their family’s finances. [Washington Post, 2/26/13]

Nationwide:

• Without sequestration, GDP growth could be about 0.6 percentage points faster in 2013 and the equivalent of about 750,000 more full-time jobs could be created or retained by the fourth quarter. [Congressional Budget Office, 2/28]
• Small Business Administration loan guarantees could be cut by up to $902 million, constraining financing needed by small businesses to maintain and expand their operations and create jobs. [White House]
• The Economic Development Administration’s ability to leverage private sector resources to support projects that spur local job creation could be restricted, likely resulting in more than 1,000 fewer jobs created than expected and leaving more than $47 million in private sector investment untapped. [White House]
• The International Trade Administration could be forced to reduce its support for America’s exporters, trimming assistance to U.S. businesses looking to increase their exports and expand operations into foreign markets.
• In addition, ITA may not be able to place staff in critical international growth markets, an opportunity for many American businesses to increase their sales and create jobs at home. These staff would have been part of a key program working to promote and facilitate global investment in the U.S., supporting thousands of new jobs through Foreign Direct Investment. [White House]
• New poll by the Pew Research Center and The Washington Post finds that most say the budget sequester would have a major effect on the economy as well as on the U.S. military. [People Press, 2/25]

Policy Experts and Economists:

• Bank of America Chief Executive Brian Moynihan: “If they could get this fixed, the economy is poised to take off.” [Wall Street Journal, 2/28]
• Federal Reserve Chairman Ben Bernanke: “Besides having adverse effects on jobs and incomes, a slower recovery would lead to less actual deficit reduction in the short run for any given set of fiscal actions.” [Reuters, 2/28]
• Informational Technology and Innovation Foundation: “The most devastating, long-term effects from sequestration will be in innovation, and these could ultimately reduce U.S. GDP by over $200 billion per year,” [Christian Science Monitor, 2/27]
• Paul Kasriel, economist who publishes “The Econtrarian” blog: “Fewer air traffic controllers imply a reduction in flights, both passenger and freight, [and longer airport delays]. This ... will slow the wheels of commerce, i.e., slow real GDP growth." [Christian Science Monitor, 2/27]
• Bipartisan Policy Center: “gross domestic product will grow by 1.4 percent this year, compared to 2.0 percent if the sequester was not in place. The Bipartisan Policy Center estimates the sequester will lead to 1 million lost jobs in 2013 and 2014.” [Reuters, 2/28]