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Jobless, public projects may feel pain first

WASHINGTON — Who will be the first to feel the sting?

Jobless Americans who have been out of work for a long time and local governments that are paying off loans to fix roads and schools are in tough spots when it comes to the automatic federal budget cuts that are scheduled to kick in Friday.

About 2 million long-term unemployed people could see checks now averaging $300 a week reduced by about $30. There could be reductions in federal payments that subsidize clean energy, school construction and state and local public works projects. Low-income Americans seeking heating aid or housing or other aid might encounter longer waits.

Government employees could get furlough notices as early as next week, though cuts in their work hours won’t happen until April.

In Nevada, automatic budget cuts to the Defense Department based on furloughs of Air Force and Army civilian workers and reductions to the Nevada Army National Guard and Army Reserve operations in the state would translate to roughly $18.7 million in payroll and funding losses over the next seven months, according to figures released Monday by the White House and previously by the Air Force.

The timing of the “sequester” spending cuts has real consequences for Americans, but it also has a political ramifications. How quickly and fiercely the public feels the cuts could determine whether President Barack Obama and lawmakers seek to replace them with a different deficit reduction plan.

Eager to put pressure on Republican lawmakers to accept his blend of targeted cuts and tax increases Obama has been highlighting the impact of the automatic cuts in grim terms. He did it again on Monday, declaring the threat of the cuts is already harming the national economy.

Republicans say he is exaggerating and point to rates of spending, even after the cuts, that would be higher than in 2008 when adjusted for inflation. All Obama has to do to avoid the damage, House Speaker John Boehner said at the Capitol, is agree to the GOP’s recommended spending cuts — with no tax increases.

By all accounts, most of the pain of the $85 billion in spending reductions to this year’s federal budget would be slow in coming. The dire consequences that Obama officials say Americans will encounter — from airport delays and weakened borders to reduced parks programs and shuttered meatpacking plants — would unfold over time as furloughs kick in and agencies begin to adjust to their spending reductions.

“These impacts will not all be felt on Day One,” Obama acknowledged in a meeting Monday with governors at the White House . “But rest assured the uncertainty is already having an effect.”

Homeland Security Secretary Janet Napolitano warned that the federal government would be unable to “maintain the same level of security at all places around the country” once the automatic cuts began to take effect.

The public will feel the results “in the next few weeks,” she said, and “it will keep growing.”

The majority of the federal budget is walled off from the cuts. Social Security and veterans’ programs are exempt, and cuts to Medicare are limited to a 2 percent, $10 billion reduction in payments to hospitals and doctors. Most programs that help the poor, such as Medicaid, food stamps, subsidized school lunches, Pell Grants and supplemental security income payments are also exempt.

Still, the Pentagon will feel the brunt of half the cuts. Pay for active military is off-limits for cuts, so the rest of the defense budget must absorb the hit.

White House officials said the Nevada Army National Guard is targeted for $5.46 million in funding reductions from March through September, while the Army Reserve in Nevada can expect $1.32 million in reductions. Two private-sector jobs would be lost from reduced military investments, and 79 civilians who work for the Army can expect
20 percent pay cuts under furloughs that combine for $473,000 in pay losses.

“In general, agencies are implementing this through furloughs. The cuts are something that go across the personnel side and procurement,” Jason Furman, principal deputy director of the National Economic Council, said Monday in a White House conference call.

Nevada Army personnel total 567 full-time soldiers; 4,449 Guard and Reserve citizen-soldiers; and 1,654 full-time civilian workers.

Hawthorne Army Depot in Northern Nevada would cut 20 percent of its workforce under sequestration. The Army’s major industry partner, the Protection Tech Inc. plant north of Carson City, would be affected .

The Army cuts would be in addition to 1,462 Air Force civilian workers in Nevada who could expect furlough notices for 20 percent pay cuts through the Sept. 30 end of the fiscal year. That translates to a combined $11.4 million pay loss for civilian Air Force workers, primarily at Nellis and Creech Air Force bases, where the bulk of Nevada’s civilian workforce for the Defense Department is located.

The Obama administration reports that defense contractors have ramped down work, contributing to a dip in economic activity in the fourth quarter of last year. The Navy has decided not to deploy an aircraft carrier as planned to the Persian Gulf.

Elsewhere, the White House’s budget office reports long-term unemployed Americans would lose an average of more than $400 in benefits over the year. The cuts do not affect state unemployment benefits, which jobless workers typically get soon after their loss of work. The federal reductions could begin immediately, though some analysts say the government could delay them for a short period to avoid a harmful hit on the economy.

Bill Hoagland, a former top Republican Senate budget aide and now senior vice president at the Bipartisan Policy Center, a Washington think tank, said the administration must be “betwixt and between” when it comes to addressing reductions in programs like jobless aid.

“They want to make sure the American public knows this sequester is a bad thing, but they also don’t want to disrupt the economy too much,” he said. “It’s not that the reductions won’t take place. But they could delay the impact of that until later in the year.”

Review-Journal writer Keith Rogers contributed to this report.

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