'Sequester' watch: Will US spending cuts really cost 750,000 jobs?
Critics say President Obama is spinning the likely impact of 'sequester' cuts to pressure Republicans to replace them, but private-sector forecasts suggest that a loss of 750,000 jobs may not be far off.
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However, the range of private-sector forecasts would indicate that Obama and the CBO are not merely playing a political spin game on the employment risks.Skip to next paragraph
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An important caveat: All this doesn’t mean the jobs issue can easily be disentangled from politics. Critics of Obama, who has waged a public campaign against the sequester in recent weeks, say he’s eager to play up any economic fallout – in the hope that it will nudge Americans to support more tax hikes and fewer spending cuts.
The White House has warned that the spending curbs will have impacts ranging from lost jobs to diminished military training and cutbacks in programs that support schools, low-income workers, and people with mental-health challenges.
Many pundits expect the two political parties to reach a deal, or a succession of deals, to roll back the size of the spending cuts, and to amend their arbitrary nature.
Even if the spending reduction stays in place, it doesn’t mean massive layoffs at federal agencies. Instead, many departments are planning to furlough workers, asking many to work four days a week instead of five for part of the fiscal year.
Still, those furloughs, set to begin as early as April, can be viewed as the equivalent of job cuts. They certainly affect the take-home pay and spending power of workers.
The defense contracting industry, too, may have to engage in large-scale layoffs or furloughs, if the spending cuts remain in place
But the sequester’s largest job impacts may be less visible, as reduced federal spending and furlough-related pay cuts ripple outward. The reduced consumption would mean fewer jobs at places ranging from retailers to restaurants and office-supply stores.
It would mean not just layoffs but slower creation of new jobs, forecasters say.
The bright side of the spending cuts, some economists predict, is that it could improve the outlook for stabilizing the national debt – which should help to buoy business and consumer confidence.