Study: 9% unemployment if Congress doesn’t stop sequestration

posted at 12:01 pm on July 17, 2012 by Rob Bluey

The congressional Super Committee is long gone, but the consequences of its failure will be felt by millions of Americans unless Congress addresses mandatory cuts that take effect Jan. 2, 2013.

A new study released today by economist Stephen S. Fuller of George Mason University and the Aerospace Industries Association estimates that 2.14 million U.S. jobs will disappear as a result of the Budget Control Act’s sequestration mandate. That would push the nation’s unemployment rate above 9 percent.

Automatic cuts totaling $1.2 trillion will hit the defense industry particularly hard. Defense-related jobs makes up about half of the lost jobs, according to the study. The report estimates losses for other sectors of the economy as well: 48,059 jobs in healthcare, 98,953 in construction, 473,250 in manufacturing. California, Virginia and Texas will fare worst.

Aerospace Industries Association President Marion C. Blakey and Fuller will share details about the study at The Bloggers Briefing at noon ET Tuesday at The Heritage Foundation. Click here to watch it live.

Fuller predicted an uptick in unemployment without action from Congress:

The unemployment rate will climb above 9 percent, pushing the economy toward recession and reducing projected growth in 2013 by two-thirds. An already weak economy will be undercut as the paychecks of thousands of workers across the economy will be affected from teachers, nurses, construction workers to key federal employees such as border patrol and FBI agents, food inspectors and others.

The first year of cuts will result in a $215 billion drop in America’s GDP. The overall U.S. workforce also faces a $109.4 billion decrease personal earnings.

Cuts to America’s military are particularly alarming. The across-the-board cut of more than $500 billion over the next decade comes in addition to the $487 billion in cuts already proposed by President Obama for the Department of Defense. The Budget Control Act hits the military hardest.

At the release of today’s study, New Hampshire’s two senators — Republican Kelly Ayotte and Democrat Jeanne Shaheen — warned of the consequences of inaction. Ayotte emphasized the impact on America’s military in particular:

Military leaders have been clear that defense sequestration will deprive our troops of the resources they need and undermine our national security for generations. This new study underscores that sequestration will also crush our economy, devastate our defense industrial base, and put tens of thousands of Americans out of work.

Defense readiness is already a mounting concern. All branches of the military are attempting to do more with less, relying on SUVs for combatextending the life of aircraft and cutting back on our Navy fleet.


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