Institute for Economic Competitiveness

Nationally Recognized, Locally Focused.


By: Laura Green

Original Link: The Palm Beach Post, FL 2.24.13

February 24, 2013

Washington —

Virtually every sector of Florida’s economy will be hit if Congress and the White House cannot reach yet another deal to stop deep cuts in defense and domestic programs set to take effect Friday.

In Florida, about 750 teachers and aides could be laid off; 31,000 Department of Defense workers would be furloughed; 1,600 children would lose their place in day care; and thousands fewer will receive vaccinations. Funds to feed poor seniors also would be cut by $3.8 million, according to a report released Sunday by the White House.

Air-traffic control facilities at Boca Raton Airport and Witham Field in Stuart also could be closed, the FAA said in a separate announcement.

While members of both parties took to the airwaves Sunday, a compromise looked miles away.

Washington’s latest high-wire act has been years in the making.

In 2011, as part of a last-minute agreement to avoid defaulting on the nation’s debt for the first time, Congress and the White House formed a bipartisan committee to develop a comprehensive plan to cut how much money the nation owes. The deal included a clause that essentially said that if that committee could not reach a deal, the government would face $85 billion in arbitrary and painful cuts to both domestic and defense programs this year.

The budget hatchet job was designed to threaten both defense hawks in the Republican Party and Democrats unwilling to cut domestic programs. Faced with cuts so wrenching and widespread, the committee could not fail to find a better alternative, the logic went.

But fail it did, so the cuts were set to take effect at the end of 2012. The White House and Congress last month pushed off the pain until March in a short-term agreement that solved little.

Republicans broke a 20-year pledge not to raise taxes as part of that deal. Not surprisingly, many in the party are reluctant to budge again, even while the White House tries to place the blame on their shoulders.

Senior White House adviser Dan Pfeiffer said Republicans had been talking about closing tax loopholes only months ago — something President Barack Obama wants to do to raise some money in place of some of the cuts — but now Republicans are refusing.

“They are so focused on not giving the president a win that they are undermining their own policy goals,’ he said.

Republicans argue that taxing the wealthy cannot be the only answer to fixing the nation’s spending problems. They say the idea of the cuts originated with the White House — and that Obama is to blame if they come to pass.

Republican leadership had initially pledged to stop the looming cuts, as they objected in particular to their effect on defense. But now some also argue that the Obama administration has overstated the toll the cuts will take.

On Fox News Sunday, Sen. Tom Coburn, an Oklahoma Republican and the ranking member of the Senate Homeland Security and Governmental Affairs Committee, said Obama is “absolutely” exaggerating the effects of the cuts, known as the sequester.

So far, Americans are not sweating the impending budget crisis, according to a new poll. But if they have to choose who is at fault, Republicans face the brunt of the blame.

According to a Pew Research Center poll, 49 percent say congressional Republicans would be more to blame, while just 31 percent would mostly blame Obama. Among those polled, about 25 percent say they’ve heard a lot about the scheduled cuts. About as many say they’ve heard nothing at all.

While the cuts won’t go into effect all at once, Americans will feel the pinch sooner in some places than others.

Take airport security, for example. The Transportation Security Administration is already warning of longer waits in security lines. Beginning in March, the TSA would freeze hiring and eliminate overtime. About 50,000 officers would be furloughed for up to seven days to cut expenses.

Economists worry the belt-tightening will hurt the fragile economy.

Florida has been slower to rebound than other parts of the country. Sean Snaith, director of the University of Central Florida’s Institute for Economic Competitiveness, predicted 2013 would be the year when the state broke away from the pack and outperformed the national economy. The question is whether losing millions in government money would hamper recovery efforts.

The state stands to lose $2.3 million in job search assistance, referral and placement. That translates to 78,960 fewer people getting training or help to find a job.

The loss of wages due to furlough in the Department of Defense is expected to drain the state of $183.2 million in gross pay. Base funding also will be cut.

The Navy stands to lose the most at $135 million for aircraft depot maintenance in Jacksonville and $3.2 million in demolition projects in Pensacola that could be canceled.

Air Force operations in the state could lose $23 million and Army base operations are slated to lose $7 million.

The staffs of every government agency are reviewing their options and trying to protect critical operations, the administration said.

“When you’re taking an $85 billion cut over a seven-month period, there is no road map of flexibility that allows you to eliminate many, many of the disruptions that are going to occur,” said Danny Werfel, the controller of the federal Office of Management and Budget.

“This is going to have very real impacts on people’s lives and communities,” agreed Pfeiffer, the White House adviser.

But Pfeiffer said the president has not lost hope.

“With a little bit of compromise and common sense, this could be resolved,” Pfeiffer said.

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