Switch to Desktop Site

'Sequester' harm to economy? Maybe for longer than you think.

Next Previous

Page 2 of 3

About these ads

"The most devastating, long-term effects from sequestration will be in innovation, and these could ultimately reduce U.S. GDP by over $200 billion per year," concludes an analysis released this week by economists at the Information Technology and Innovation Foundation, a Washington think tank.

That amount is double the roughly $100 billion in total annual spending cuts that the sequester would impose.

The group's report doesn't argue that federal deficits should be ignored. The sequester originated in federal law as a blunt tool, to ensure that if politicians couldn't agree on a substantial deficit-reduction plan, some spending cuts would be imposed automatically.

Other economists also say the sequester will affect the economy's productive capacity -- not just withdraw some "spending money" from the pockets of consumers or corporations.

"Fewer air traffic controllers imply a reduction in flights, both passenger and freight, [and longer airport delays]," writes Paul Kasriel, an economist who publishes The Econtrarian blog. "This ... will slow the wheels of commerce, i.e., slow real GDP growth."

For some individuals and industries, the sequester's effects may be severe. Examples would be a low-income worker who loses access to child-care subsidies, or a defense contractor asked to put a big project on hold.

Next Previous

Page:   1   |   2   |   3