Virginia Commonwealth University

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Much at Stake in Virginia as Federal Cuts Loom

February 20, 2013

By Jessica Dahlberg
Capital News Service

RICHMOND – Reading the news this week can be a little like reading the story of Chicken Little. Except in this story, the sky is not falling – the sequester is coming.

The sequester refers to automatic federal-government spending cuts totaling an estimated $1.2 trillion over the next nine years. They will take effect March 1 unless Democrats and Republicans can make a deal on reducing the federal budget deficit.

Sequestration was designed to be a ticking bomb as part of the Budget Control Act approved by Congress in August 2011. Lawmakers hoped the specter of severe cuts would force bipartisan cooperation into crafting another solution to the problem of huge deficits.

However, the collaboration between the political parties is not happening. And as the sequester draws near, it has the potential to harm Virginia’s economy.

“The automatic sequestration reductions mandated by the BCA of 2011 are already having a significant effect on the Commonwealth,” Gov. Bob McDonnell wrote in a letter to President Barack Obama. “When fully implemented, they could force Virginia and other states into a recession.”

The sequestration cuts would total $109 billion a year until 2021. They would be divided evenly among defense and non-defense spending, according to the Bipartisan Policy Center.

“The cuts would be devastating for national security and the Virginia economy,” Leo Cruz, a Virginia military veteran, said at a telephone press conference conducted Wednesday by the state Democratic Party.

If Congress fails to meet its March 1 deadline on reducing the budget deficit, Virginia could lose more than 207,000 jobs, according to a 2012 study by George Mason University. About 136,000 of those jobs would be a result of defense cuts.

Hampton Roads would be especially hurt by the sequester because half of the area’s economy is tied to defense, Cruz said. The area has such major bases as Naval Station Norfolk and Langley Air Force Base.

Virginia would face $1.4 billion in losses from the Navy cuts because it would have to reduce ship operations and flying hours, stop naval construction and halt the funds for naval fleet restoration and modernization, McDonnell’s letter to Obama said.

Military personnel would not be the only Virginians affected by sequestration.

According to an American Hospital Association study, Medicare payments to health-care providers would be reduced 2 percent. In 2013, hospitals, doctors and other providers nationwide would have to absorb a $10.7 billion cut – and the figure would grow to $16.4 billion in 2021, the study said. It said nearly 500,000 jobs would be lost as a result.

Sequestration also would squeeze education and maternal and child health programs. The American Academy of Pediatrics estimates that 32,500 women, children and families could be cut from the Virginia Title V Maternal and Child Health Services block grant, a program that ensures access to quality care for low-income families.

“Virginia seniors and middle-class families are being forced to pay the price for the dysfunction in Washington,” Dr. Mary Christian, a senior from southern Virginia, said at the press conference.

Mandatory government spending is exempt from the sequester. This category includes Social Security, veterans’ benefits, Medicaid, food stamps and Temporary Assistance for Needy Families, as well as a number of other programs.

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More on the Web

Bipartisan Policy Center Fact Sheet

George Mason University study

Gov. Bob McDonnell’s letter to President Obama