WASHINGTON – The congressional supercommittee has failed, and now Maryland could face as much as $150 million in cuts to its 2014 budget, including millions in lost funding through federal education and health care programs, state experts say.
And that’s not all. Maryland’s defense and federal work force could be in jeopardy through mandated cuts to defense and other federal programs.
“Defense spending — that means jobs in Maryland,” said Rep. Dutch Ruppersberger, D-Cockeysville, who sits on the House Armed Services Committee. “It would clearly be very hurtful to our economy.”
The supercommittee, officially known as the Joint Select Committee on Deficit Reduction, was charged with cutting more than $1.2 trillion from the federal deficit over 10 years. It was to submit a plan by Wednesday, but members gave up in frustration on Monday.
The Maryland Department of Legislative Services laid out the consequences of failure in a briefing last week, outlining cuts to the state budget based on the supercommittee’s impasse. Congress mandated across-the-board “sequestration” cuts be imposed should the joint committee fail to meet its obligation.
“We’re staying in tune to what’s happening on the federal level,” said Takirra Winfield, Gov. Martin O’Malley’s deputy press secretary. “Most of the impact, I believe, would affect a lot of the local programs.”
Of $9.3 billion in federal funding Maryland currently receives, about 20 percent could be subject to the mandated cuts — including funding for special education grants, child support enforcement and some low-income housing vouchers, according to the state report. Predictions could change, but Winfield said the low estimate for 2014 budget impact is $130 million.
States like Maryland, with high concentrations of federal employees and contractors, could feel an even deeper sting when $600 billion in defense spending and $600 billion from other federal agencies is lopped from budgets over the next 10 years.
Reaction from Maryland and elsewhere includes plenty of finger pointing and mirrors the type of bickering that led to the threat of government shutdowns earlier this year and the downgrading of the nation’s credit rating this summer.
“This was doable, and the American people are justified in being disappointed that the supercommittee could not put aside partisan differences to seek a compromise,” Sen. Ben Cardin, D-Md. — who called himself an optimist last week — said Monday.
Supercommittee member Chris Van Hollen, D-Kensington, blamed the Republicans. They were unwilling to budge on taxes, he said, and presented a plan that did nothing for jobs creation. Some Republicans on the panel knew their plan lacked balance yet failed to compromise.
Republicans, including Maryland Rep. Andy Harris, R-Cockeysville, said Democrats are at fault for pushing tax increases over spending cuts.
As Thanksgiving approaches, Sen. Barbara Mikulski, D-Md., said Marylanders see uncooperative congressman as “turkeys.”
For Maryland, which is heavily dependent on federal and defense work, trigger cuts could hit the pocketbook.
Military bases accounted for 3.4 percent of the total job pool in Maryland and employed about 118,000 workers, before BRAC realignment, which increased these numbers, according to the Maryland Department of Business and Economic Development.
War spending is protected, but military contracts and civilian personnel could be on the chopping block.
Mike Hayes, a retired brigadier general and director of Military and Federal Affairs for the Maryland Department of Business and Economic Development said Maryland’s military installations tend to have specialized missions like medical research, intelligence and cybersecurity that make them less likely to face cuts compared to bases in Texas, North Carolina and California.
“The bottom line is I think the uniqueness of missions associated with the installations in Maryland insulates us from cuts,” Hayes said.
But cuts to contractors focused on weapons systems may be deeper, though these have already been set in motion, Hayes said.
Taken broadly, the potential consequences of sweeping automatic cuts have been called “catastrophic” by budget experts. The point of the supercommittee was to find a balance of tax increases and cuts to develop a deficit reduction plan that wouldn’t shock the economy.
That didn’t happen.
“I think it’s going to be absolute chaos,” said Scott Lilly, a former Democratic staffer and former staff director of the House Appropriations Committee, now senior fellow at the Center for American Progress. “Pandemonium and massive unintended effects.”
Agencies such as the Federal Bureau of Investigation, Internal Revenue Service and Federal Bureau of Prisons could face massive staff cuts, he said. This not only affects the employees directly but affects the ability of the government to deliver services.
Programs like Social Security and Medicaid will be safe from trigger cuts. But Medicare is not.
Payments made through the program to hospitals and other care providers could be reduced by 2 percent. This is not a cut to actual services, but rather a cut to what the government pays for them.
“The value of Medicare reimbursement has been eroding for many years,” said Neil Bergsman, director of the Maryland Budget and Tax Policy Institute. While 2 percent isn’t a major cut, he said it could eventually lead some doctors to stop accepting Medicare patients.
Joeseph DeMattos, president of the Health Facilities Association of Maryland, put it more bluntly.
“Ultimately, any cut to Medicare — any cut — is a cut to Medicare beneficiaries,” said DeMattos, who is former senior state director for the American Association of Retired Persons.
For Maryland, budget analysts say the numbers are still up in the air. Congress may find some way to avoid the cuts, but partisan bickering has so far led to nothing more than a series of stalemates and missed deadlines, even as Americans struggle to find work in a dismal economy.
“I tend to think that somehow they’re going to undo sequestration,” said Lilly, “and we’ll end up with nothing.”