Fiscal cliff could cost hundreds of thousands of federal jobs
December 08. 2012 8:41PM
The magnitude of losses to the labor force if Congress and the White House can't reach a deal to avert $1.2 trillion in automatic spending cuts would undermine the nation's economy by crippling airports, federal courts and food processing plants and would jeopardize safety at federal prisons, lawmakers and policy experts say.
"I'm astounded that people haven't estimated this and thought through the consequences more clearly," said Scott Lilly, a senior fellow at the Center for American Progress, a liberal think tank, who formerly served as clerk and staff director of the House of Representatives Appropriations Committee.
Hitting the so-called fiscal cliff would send the economy back into recession and cause unemployment to surge to 9.1 percent by the end of next year, according to a report Nov. 8 from the Congressional Budget Office, the independent budget arm of Congress.
The CBO estimates that the economy would shrink by 0.5 percent next year if all the tax increases and spending cuts are enacted.
The budget cuts, known formally as sequestration, would be felt across the country. An estimated 85 percent of the federal workforce lives and works outside the Washington beltway, according to William Dougan, the chairman of the Federal Workers Alliance, a collective effort of 22 unions that represent more than 300,000 federal employees.
"If sequestration kicks in, that will be the biggest threat to the federal workforce," Dougan said.
An estimated 277,000 federal workers and 470,000 federal contractors might lose their jobs in the next 12 months, according to a study by George Mason University, as part of cuts stipulated in the Budget Control Act of 2011, which was signed to raise the federal borrowing limit.
The District of Columbia and nine states - including California, Texas, Florida and Pennsylvania - are particularly vulnerable to federal spending cuts, as they account for more than half the expected job losses, the report found. The other states are Virginia, Maryland, New York, Massachusetts and Georgia.
Facing huge federal deficits for years to come, however, policymakers need to look more closely at trimming some of $200 billion annually spent in federal pay, according to Chris Edwards, the director of tax policy studies at the Cato Institute, a libertarian policy group.
He said excessive growth of the federal workforce, combined with overly generous benefits, kept its employees on "an elite island of secure and high-paid workers." It's time for some restraint, he said.
"We got a trillion-dollar deficit," Edwards said. "We have to cut every area of the budget. So we ought to cut federal pay.
"Or we ought to at least freeze federal pay."
The Department of Labor and other agencies have referred questions about department impacts to the White House's Office of Management and Budget.
Calls to the OMB weren't returned, but an agency report says there's "no question that the sequestration would be deeply destructive to national security, domestic investments and core government functions."
A worst-case scenario includes as many as 100 airports shutting down because of a lack of air traffic controllers, meat processing plants closing because of lost food inspectors and unsafe prisons because of lost guards, Lilly said.