MassBenchmarks posits on possible budget cut outcomes
With a precarious economic recovery to preserve, currently mandated federal spending cuts of $1.2 trillion over the next ten years are set to begin in 2013. The Budget Control Act of 2011 requires that these cuts be split equally between defense and nondefense programs and includes reductions to Medicare and other mandatory spending programs. Assuming that the cuts will be enacted in accordance with the Budget Control Act, MassBenchmarks used REMI, a dynamic forecasting and comprehensive economic tool that answers “what if” questions about the state’s economy, to estimate the potential impact the cuts would have in Massachusetts.
While Massachusetts relies heavily on federal defense spending, other leading industries would also be substantially affected, including Professional and Technical Services, Health Care and Social Assistance, resulting in approximately 52,000 jobs lost.
The types of jobs that can be expected to be lost range widely, but on average these jobs require higher levels of educational attainment and are high paying with benefits. Significantly, they are within the sectors that have allowed the Massachusetts economy to outperform the nation is recent years, a fact that underscores the stakes for the Bay State in ongoing federal budget debates.
The full bulletin is available below.
February 23, 2012