Sequester is bad word for California’s economy

150 150 Ed Coghlan

Governor Jerry Brown will be tasked with sifting through the economic damage from the coming sequester cuts. (Photo Credit: Randy Bayne)

The so-called sequester budget cuts are going to hit the California economy hard, very hard,  if they take effect.  The Obama Administration and Congress have until Friday to figure something out, if they are going to avoid the beginning of $85 billion in budget cuts that by all accounts will hit the Golden State harder than any other state in total jobs lost. Here’s how the White House describes what will happen to California.

The Long Beach Press Telegram reports that 225,000 current and future jobs, $670 million in federal grants and a whopping $33 billion in military and defense resources are at risk.

The National Governor’s Association is meeting in Washington D.C. and the governors understandably are concerned since of a lot of money in their state budgets comes from the federal government. This LA Times story gives us a look into what the nation’s governors, including our own Jerry Brown, are thinking. As you might guess, they are worried.

In fact, many states say the cuts would be a burden on what it is a fragile economic recovery, and might even push us back into a recession.

I would expect you agree that this latest manmade crisis between Democrats and Republicans who are absolutely incapable of finding common ground on anything fiscal is another example of the paralysis that grips our federal government. If the politics of this mean anything to you, then the Democrats are probably winning the argument. Pew Research indicates that three out of four Americans believe that a combination of revenue increase and tax cuts are needed. Don’t think that popular opinion means the Republicans are necessarily going to compromise.

In fact, two California researchers think this paralysis between Democrats and Republicans in Washington D.C. is real and intransigent. Scott Wiltermuth of the University of Southern California and Francis Flynn of Stanford University were featured in an ABC News story recently. If they are to be believed, compromise is almost impossible. The two researchers said they believe a sense of personal power has made  many members of Congress convinced they are right, even on issues with many shades of gray.

 Here’s hoping the researchers are wrong. People who are working to fix the California economy, including our friends at the California Economic Summit, don’t need this huge speed bump of massive federal budget cuts in California. The Summit has identified seven Signature Initiatives needed to improve job creation in California and to improve the state’s ability to compete in the 21st century global economy. We took another look at those initiatives, and not one of them called for a quarter of a million jobs lost. 


Ed Coghlan

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