UMass Study Says Pending Federal Budget Cuts Could Reverse Baystate's Economic Recovery
Looming cuts in Federal government spending could reverse Massachusetts' economic recovery. That's according to a new report by the UMass Donahue Institute that looks at the impact of congressionally mandated cuts signed by President Obama and slated to begin next year. The Mass Benchmarks study found that nearly $84 billion in federal monies, from social security and healthcare to defense and research and development, went into the Massachusetts economy in 2010. Robert Nakosteen an economics professor at UMass and Mass Benchmark's executive editor, says the cuts, if implemented, could lead to the loss of nearly 53,000 jobs in the Baystate over the next ten years.
“To put that in perspective, last year was pretty good for our economy in coming out of recession. This state never has a lot of employment growth, but we added over 40,000 jobs last year. So that the kind of cuts we're looking at, although it seems small as compared to the total size of our economy, would wipe out an entire year's job gains”
Nakosteen says the jobs lost would primarily be high paying, well-benefited ones in critical sectors of the economy.
“In addition, there would be cuts to Medicare providers that would affect our healthcare and social assistance sector. Well this too is one of the things this state is known for, its research hospitals and healthcare. And so the combined effect of the cuts in these two sectors would be very noticeable and potentially damaging to the innovation economy and the high-tech economy that we've been riding really as this economy has recovered from the recession.”
Nakosteen says the cuts are not entirely inevitable. He says there's a proposal on Capitol Hill that would exempt the Defense Department from all or the most severe reductions. Nakosteen says another initiative that would emphasize military spending on cost-effective technology, rather than high-cost troops, could feed into the state's strength and neutralize any negative cuts.