IF you think our country's hurting now, wait another 5 ½ months. As became clearer this week, the combination of tax increases and massive, automatic budget cuts scheduled to hit in 2013 will deliver the sort of blow to our economy that could take years to overcome.
Ben Bernanke, chairman of the Federal Reserve, gave a bleak overview to the Senate Banking Committee on Tuesday — our economy is growing, but only modestly, and has waned in the past few months. Job growth and manufacturing have slipped, consumer spending is down.
And if Congress doesn't reach an agreement to stave off a budget crisis, Bernanke said, “It would probably knock the recovery back into a recession and cost a lot of jobs, and would greatly delay the recovery that we're hoping to facilitate.”
A lot of jobs? A report by the Aerospace Industries Association estimates that the $1.2 trillion cuts in defense and domestic programs — slated to kick in at the start of next year — will put about 2 million people out of work. That would bump the unemployment rate by 1.5 percent, and result in billions of dollars' worth of losses to the economy.
In Oklahoma, roughly 8,000 defense-related jobs (and a total of 16,000 jobs) would likely be wiped out, with economic activity declining by $1.6 billion, the report said.
These cuts are looming because last year, Congress and the president agreed to slash spending by $2 trillion over 10 years as part of a deal to raise the nation's borrowing limit. Roughly half of the cuts went into effect immediately. An additional $1.2 trillion in cuts is scheduled to go into effect in January — with $500 billion of those hitting the Department of Defense, after a congressional “supercommittee” failed to agree on how to spread the cuts among many agencies.