Sequestration, already taking effect, would take its toll on Indiana, Walorski, economist warn
March 1 may be the official date for implementation of sequestration.
It’s already happening, though, says U.S. Rep. Jackie Walorski. The U.S. Department of Defense, she notes, has been implementing cost-cutting measures in anticipation of the mandatory mix of spending cuts that are part of the sequestration plan, meant to trim the U.S. deficit.
And without a viable alternative — sought by U.S. leaders, but thus far out of reach — she warns of the trickle-down effect of the “reckless” sequestration cuts, impacting military installations here and Indiana defense industry manufacturers, even jeopardizing national defense.
“Sequestration is happening now,” the Republican said in a phone interview Friday, Feb. 22, from her local 2nd District office in Mishawaka. “This is not something we’re going to wake up to. It’s happening now.”
Michael Hicks, an economist at Ball State University, said over the next 12 months, sequestration would result in $110 billion in spending cuts nationwide, $2.2 billion of that, potentially, in Indiana. The more common figure cited in recent media reports puts the overall cuts at around $85 billion, but that’s in the seven months through September, according to the Associated Press.
Untouched, the varied sequestration cuts could result in furloughs of perhaps 3,000 workers involved in U.S. DOD and Indiana National Guard functions across the state, Hicks said. As time passes, the impact would grow beyond just defense — fewer U.S. Department of Agriculture grant dollars, for instance, and less U.S. Department of Commerce grant funds for local communities.
“Some of these things won’t hit right away, but they’ll hit down the road,” said Hicks.
Defense contractors and suppliers to defense contractors — Humvee-maker AM General in South Bend, for instance — could ultimately take a hit as defense spending dries up, he noted. Extension benefits for the long-term unemployed could be curtailed, forcing them to accept jobs they wouldn’t otherwise take.
A July 2012 report by George Mason University economist Stephen Fuller estimated that 23,942 jobs in Indiana were at risk due to the evolving sequester plans — 14,950 U.S. DOD-related jobs and 8,992 other jobs. That was before lawmakers reached an earlier accord avoiding the fiscal cliff cuts to have taken effect on Jan. 1.
SPENDING CUTS, NEW TAXES?
The aim of the drastic sequestration plan was to force lawmakers to come up with a more palatable alternative. One of the big sticking points in the process has been division over whether deficit reduction should occur through just spending cuts, the GOP view, or a combination of spending cuts and tax increases, the Democratic take. That division is evident in Indiana’s legislative delegation to Washington D.C.
U.S. Sen. Joe Donnelly, a Democrat, has voiced support for a combo of spending cuts and new revenue, in part through closure of what he views as tax loopholes that benefit big corporations and the wealthy.
“It is time for members of both parties to set politics aside and find ways to significantly reduce spending, close unnecessary tax loopholes, and better balance the budget,” Donnelly said in a statement.
Walorski, who serves Indiana’s 2nd District, including Elkhart County, and U.S. Sen. Coats, another Republican, think Washington spends more than enough.
Though Coats didn’t support sequestration, Washington needs to live with the law “until the president is willing to abandon his call for more taxes and instead agree to responsible, targeted alternative spending reductions,” Coats’ office said in a statement. He thinks the public is taxed enough.
Walorski pointed her fingers at the U.S. Senate, controlled by Democrats, and Obama.
There’s been no lack of proposals to replace sequestration. The GOP-led House, she said, has put forth deficit-reduction plans, but neither the Senate nor president has pursued them.
“I would say that there are more than ample long-term, short-term and mid-term solutions that have been presented already,” she said. “Certainly the American people need to know that the solutions are there and they’ve been there for over a year.”
She pointed to a new House proposal that she co-sponsored, the Down Payment to Protect National Security Act. That measure, meant to forestall sequestration defense cuts, calls for a reduction over time in the federal workforce through attrition and a pay freeze for members of Congress.
Obama, meanwhile, could grant “flexibility” to defense officials so the mandated sequestration cuts could be focused on waste instead of “meat,” said Walorski.
Like Coats, she voiced opposition to new taxes, noting the fiscal cliff negotiations that already led to a hike in taxes for the wealthiest Americans. “Obama just got $600 billion in revenue in the last fiscal cliff negotiations last year before I got here,” she said.