Severe budget cuts to kick in tomorrow

February 28, 2013 at 11:10 am

Economists are predicting that economic growth is on the rise this quarter, with the housing market doing better, hiring up, and increased consumer spending. Last week’s initial unemployment claims decreased by 22,000 from the previous week. For the past three months, employers have added 200,000 jobs per month— up from the average of 150,000 for the previous three months.

While the economy isn’t growing at a stellar pace, these are at least some signs that it is inching forward. But even these small rays of hope will be eliminated if Congress does not make a deal on the sequester, or the $1.2 trillion in spending cuts over 10 years, slated to take effect starting midnight tonight. These will be across the board, impacting programs and services from the gamut of federal agencies. So while there are some signs of our economy slowly (very slowly) improving, the sequester could send us spiraling back into recession. In addition, there is a threat of the federal government shutting down at the end of March.

As we’ve blogged about before, sequestration would have significant impacts on small businesses, particularly those that contract with federal agencies. CBS reports that 20 percent of defense contracts and 35 percent of defense sub-contracts are given to small businesses. Even though the sequester hasn’t taken effect yet, the uncertainty that small businesses have faced for months have let to layoffs and cutbacks. In total, two million jobs could be lost due to these budget cuts– and one million of those will be from small businesses.

The White House has also released state-by-state analyses of the impacts of the sequester. Although the full extent of the cuts are expected to occur over 10 years, the impacts will be felt starting this year. There are several impacts listed in the fact sheet, but some of them are:

  • Loss of $5 million in primary and secondary education funding, which translates to 350 teacher and aid jobs at risk.
  • 1,150 fewer work-study jobs for low-income college students.
  • Loss of $83,000 in funding for job search assistance and placement, which translates to over 15,000 fewer people getting served.
  • Loss of child care assistance for 1,300 disadvantaged and vulnerable children.
  • Loss of over $1.5 million to provide meals to seniors.

These are just some of the impacts that will be felt in North Carolina, in addition the national impacts that will affect everyone. The clock is ticking.

 

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Entry filed under: Economic Development, Economy, Jobs & Employment, Small Business. Tags: , , , , , , .

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