The deal called for $1.2 trillion in cuts that would apply to mandatory and discretionary spending from next year through 2021, with exceptions or limited reductions for Social Security, Medicaid, federal and military employee pay, and veterans and Medicare benefits.
But with a presidential election in early November, many worry that Congress and President Barack Obama won't find a way to compromise on balancing the budget. There's a possibility that thousands of federal workers and defense contractors could get pink slips just days before the election, in order for companies and agencies to comply with the federal WARN notification requirement for mass layoffs.
Towson's Irani said uncertainty and brinksmanship are slowing down the U.S. economy. Already, he said, defense contractors have slowed or stopped hiring in Maryland because they are unsure of what might happen on Jan. 2, when the cuts are supposed to take effect.
Richard Clinch, director of economic research for the Jacob France Institute at the University of Baltimore, said Maryland has benefited from federal spending for years. He estimated two years ago that as many as one in five jobs in the state were tied directly or indirectly to federal government spending.
"This thing that has protected the Maryland economy for 20 years now is coming back to bite us," Clinch said. "This whole idea of federal downsizing, which is inevitable, will have a much bigger impact on Maryland in the future."
Effect on Md.
The potential impact on Maryland if automatic federal budget cuts go into effect in January:
•$2.5 billion losses in wages and salaries from defense, civilian and contractor workforce
•12,600 lost jobs and potentially more than 100,000 in coming years
•$200 million annual revenue losses for state government from lower tax receipts
•$150 million reduction in federal funding to state and local governments.
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