Automatic Cuts To Cost Over 1.4 Million Jobs In 2013: Study

The automatic federal spending cuts scheduled to take effect early next year could result in the loss of over 1.4 million jobs in 2013, according to a new study (PDF) by Congress’ nonpartisan policy analyst.

The $48 billion in defense spending cuts are projected to result in 907,000 fewer direct, indirect and induced jobs in government and the private sector next year, the Congressional Research Service report said. The $10.7 billion in Medicare reimbursement cuts to providers are projected to cost 500,000 jobs, less than half of which are direct losses, in 2013.The report tallies figures from various studies parsing the employment impacts of the $1.2 trillion in so-called “sequestration” cuts, $109 billion of which hit the budget in 2013 — combining direct jobs (i.e. employees of federal contractors), indirect jobs (i.e. employees of entities that sell to those contractors) and induced jobs (i.e. jobs created by the money these workers spend).

Half the cuts will target national security programs while the other half target domestic programs, which the exception of Social Security and Medicaid and other programs for the poor. Medicare providers take a 2 percent pay cut.

A health industry lobby frets that the Medicare provider cuts are a “big deal,” lamenting to TPM that “any time a cut is permanent to the forward baseline, it’s a huge deal.”

The employment impacts of the tens of billions of dollars in 2013 cuts to education, health care research and aviation were difficult to measure.

The sequester was enacted in the bipartisan debt limit law in August 2011. The two parties agree that the cuts should be distributed differently but are at an impasse over how else to achieve the same level of deficit reduction.

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