WASHINGTON — — Marylanders from nearly every walk of life could be affected by across-the-board budget cuts starting in 2013 as a result of the congressional supercommittee's failure to reach an agreement to trim the nation's spiraling budget deficits.
After months of secret talks, the 12-member panel formally pulled the plug Monday on its mission to identify $1.2 trillion in deficit cuts over 10 years. Unless changed by Congress, the outcome will cause automatic reductions that would be particularly painful for Maryland, where the federal government spent $96 billion last year.
Federal employee salaries and benefits — a driver of the state's economy — are potentially in jeopardy, as is the state's robust defense industry. Seniors on Medicare, commuters who rely on highways and rail systems, and scientists whose work is funded by the National Institutes of Health could all be affected. Maryland's gold-plated credit rating could be threatened.
"This was a huge missed opportunity," said Rep. Chris Van Hollen, the Montgomery County Democrat who served on the panel. "This is a sad day for the nation."
But even as lawmakers blamed colleagues across the aisle for the breakdown, they were preparing to continue the fight next year. Because automatic budget cuts will not take place until 2013, the ongoing debate over spending and taxes is headed toward a showdown in the middle of next year's presidential election.
"I think there is a majority in both houses that does not believe that the [automatic cuts] from a policy standpoint is what they would choose," said Rep. Steny Hoyer of Southern Maryland, who is the second-highest-ranking House Democrat. "But I don't think there are the votes to put them aside unless you have an alternative.
"So the trick," he said, "is getting to an alternative."
The deficit panel was created in August as part of the agreement to raise the nation's debt ceiling. But the six Democrats and six Republicans on the committee never cleared the hurdle that also has stymied past efforts on the deficit. Democrats insisted that new taxes are needed along with cuts to entitlement programs, and Republicans remained largely opposed to those tax hikes.
If the across-the-board cuts stand, roughly half would hit defense spending and the rest would fall on nondefense programs and agencies. Some entitlement programs, such as Medicaid and Social Security, are shielded. Medicare cuts are capped at 2 percent.
Exactly where the cuts would be made is not yet clear. For the first year, President Barack Obama's administration would have broad latitude to decide which programs would take a hit. Reacting to the committee's failure Monday, Obama vowed to veto any congressional efforts to wiggle out of the automatic cuts.
Maryland lawmakers said they are concerned about the possibility of broad cuts, which could include $454 billion nationally in defense spending. Fort Meade, Aberdeen Proving Ground, Walter Reed National Military Medical Center and other military installations account for 7.5 percent of Maryland's economic activity, according to the state Department of Business and Economic Development.
Defense contractors Lockheed Martin and Northrop Grumman are among Maryland's 10 largest private employers.
"I am worried about the disproportionate impact [cuts] will have on our national security and our local economy, which relies heavily on federal defense spending," Rep. C.A. Dutch Ruppersberger, a Baltimore County Democrat, said in a statement. "The jobs of many civilian personnel and contractors in Maryland are at stake."
Defense Secretary Leon Panetta said the scheduled military cuts would "tear a seam in the nation's defense" and "lead to a hollow force incapable of sustaining the missions it is assigned."
Retired Marine Brig. Gen. J. Michael Hayes, director of Maryland's office of military and federal affairs, said the state already is seeing the effects of cuts in defense spending.
"If you are involved in weapons system development or component development — you know, the Lockheed Martins, the Northrop Grummans and so forth — there is concern," he said. "Cutbacks are clearly going to impact procurement."
Northrop announced plans last month to cut as many as 800 jobs from its Linthicum-based Electronic Systems division, most of them in Maryland. That came on top of the 500 jobs the division announced it was eliminating in May.
Electronic Systems makes airborne radar, navigation systems and other military equipment. In the October announcement, a spokesman said the reductions were based on "the current business outlook … and the anticipation of further defense spending reductions."
A spokesman for Northrop declined to comment on Monday. A spokesman for Lockheed Martin did not respond to a request for comment.
Another $465 billion in automatic cuts would come from domestic spending.