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Congress' foot-dragging could cost Utah 16,000 jobs

Published July 18, 2012 10:01 pm

Politics • Without a deal, sweeping federal cuts would kick in.
This is an archived article that was published on sltrib.com in 2012, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.

Washington • Utah could lose about 16,000 jobs next year under automatic federal cuts unless a polarized Congress can find a way to slash spending.

A new report by George Mason University's Center for Regional Analysis warns thousands of federal workers in Utah could face the ax, government vendors and suppliers may have to shed workers and the trickle-down effect could cost the state even more jobs.

"In a lot of cases, this is equivalent to wiping out the [economic] gains ... that have been achieved over the last three years," says Stephen Fuller, director of the center and author of the report. "But the consequences are magnified because they happen quickly. The local economy can't adjust to them; you can't replace these jobs in the time they're going to be lost by getting lucky with mining or with tourism or with some other sector that's growing."

As part of a deal to raise the national credit limit last year, Congress and the White House struck an agreement to slow deficit spending or face an automatic, across-the-board $1.2 trillion reduction in government programs and military outlays.

Congress so far hasn't been able to hammer out a new deal to avoid the looming cuts, which are set to start Jan. 2.

Economists worry that such a dramatic curbing of federal dollars could send the U.S. economy into another downward spiral.

"The national economy can't afford it," Fuller says. "It's too fragile."

Compared with other states, Utah isn't facing the same meat-cleaver hit to its jobs and economic status. The report says California could lose 225,000 workers and the Washington, D.C., region could see 450,000 jobs vanish.

But the losses for the Beehive State would be significant. They could slice Utah's economic output by $1.6 billion, according to Fuller's research, and statewide personal income would plunge by $821 billion.

Still, the potential losses may just be theoretical.

"It's not going to happen," says Jeff Thredgold, an economic consultant to Zions Bank who predicts politicians will reach a deal. "You've already got a weak economy. What you don't need in the economy is more uncertainty."

Thredgold notes that, on the federal level, reports like the one from George Mason are good at raising concern among Americans and keeping pressure on government leaders to avoid such extreme measures.

And, he notes, Congress and the White House have routinely put themselves in an untenable position and then come up with last-minute solutions that aren't palatable to everyone but better than the alternative.

"Bottom line is these jobs will be funded," Thredgold says.

tburr@sltrib.com

On the Web

O To read the George Mason University report, go to http://tinyurl.com/6n6gvye