Politics

November 18, 2012

Five things you need to know about the fiscal cliff

Unless it's averted, the manufactured Capitol Hill crisis will have real-world implications for you. Yes, you.

By Kevin Miller kmiller@pressherald.com
Staff Writer

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Today's poll: Fiscal cliff

How concerned are you that you’ll be personally affected by the so-called ‘fiscal cliff’?

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Barack Obama, John Boehner
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President Obama, accompanied by House Speaker John Boehner, R-Ohio, speaks to reporters at the White House on Friday. More than $600 billion in higher taxes and across-the-board spending cuts will kick in for the coming year Jan. 1 without a deal in Washington to reduce the federal deficit. Maine could realistically expect to lose 6,000 to 10,000 jobs if the spending cuts go through, USM economist Charles Colgan estimated.

2012 File Photo/The Associated Press

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IN THE LINE OF FIRE: POTENTIAL REPERCUSSIONS AT A GLANCE

Here is a sampling of potential spending cuts that that could affect Mainers. The dollar figures are the national totals.

Department of Defense, general military programs operations and maintenance: $3.9 billion

U.S. Navy, operations and maintenance (non-exempt): $4.3 billion

U.S. Navy, shipbuilding and conversion: $2.1 billion

U.S. Coast Guard, systemwide: $440 million

U.S. Customs and Border Protection: $813 million

National Oceanic and Atmospheric Administration (operations, research and facilities): $257 million

Low Income Home Energy Assistance Program: $285 million

Agricultural Disaster Relief Fund: $104 million

Rural Housing Service Rental Assistance Program: $74 million

Special Supplemental Nutrition Program for Women, Infants and Children: $543 million

Environmental restoration of former defense sites: $31 million

Special education services: $1 billion

Federal student financial aid: $140 million

U.S. Housing and Urban Development, Rental Assistance programs: $1.5 billion

U.S. Fish and Wildlife Service, Resource Management: $105 million

National Park Service, park operations: $183 million

MANY COULD LOSE THEIR JOBS

Going over the fiscal cliff would trigger the first round in $1.2 trillion in across-the-board spending cuts -- also known as "sequestration" -- spread over a decade.

Critical defense programs, military personnel, Medicare reimbursements, Social Security benefits and veterans affairs programs would be exempt.

The initial cuts of $110 billion would be evenly divided between defense and non-defense budgets.

Estimated job losses for Maine and nationwide vary widely and are subject to dispute, largely because the budget figures released so far are too general to assess specific programs and because funding will in some cases be gradually reduced instead of evaporating all at once on New Year's Day.

Colgan has seen job loss estimates for Maine from a few thousand to up to 40,000 -- a figure he said would result in an "epic calamity." Colgan is more comfortable with a figure of about 6,000 job losses, which would still reverse the gains made since the bottom of the recession.

Many of those job losses would likely be from defense contractors.

Under the White House's rough calculations -- not based on actual proposals -- next year's budget for Navy shipbuilding and conversion would plummet $2.1 billion. Those cuts would likely be felt at Bath Iron Works and the Portsmouth Naval Shipyard, which together directly employ roughly 10,000 people.

A September jobs study conducted for the Aerospace Industries Association -- a trade group -- estimated that Maine could lose 2,031 defense-related jobs at small businesses next year, plus another 1,253 jobs outside of the defense sector. An earlier study by the same economist put Maine's defense-related job losses above 4,000.

Another report by the pro-defense organizations the Center for Security Policy and the Coalition for the Common Defense cited the potential for nearly 5,800 job losses in Maine and $239 million in lost earnings.

Gov. Paul LePage cited some of the more pessimistic job-loss figures in a recent letter to President Obama regarding the fiscal cliff.

"Our state's gross output could shrink more than $348 million," LePage wrote. "I firmly believe the cost of the federal government should be significantly reduced, but those cuts should be driven by making the hard, necessary decisions to ensure future prosperity, not by Washington's abdication of responsibility."

UNEMPLOYED FACE IMPACTS, TOO

An estimated 6,500 Maine residents would lose their unemployment insurance because temporary eligibility extensions meant to help the long-term unemployed will expire. Jobless Americans will be eligible for unemployment insurance only for 26 weeks, down from the 99 weeks currently allowed.

"If the extension ended tomorrow, those workers would lose that benefit . . . so their families would take a substantial hit," said Garrett Martin, executive director of the left-leaning Maine Center for Economic Policy.

Additionally, deep cuts would affect job retraining and work force development programs used by those struggling to find employment. "From our perspective, nothing is more important right now than getting people back to work," Martin said.

K-12 FUNDING CUTS LOOM

A Maine Department of Education analysis estimates that an envisioned 8.2 percent cut would reduce federal funding to Maine schools by nearly $12.1 million, based on fiscal year 2012 numbers.

The two biggest losers would be Title 1 funding for children from low-income families, which most Maine public schools receive, and support for special education programs. Both of those areas could lose more than $4 million.

Other potential cuts include Maine's career and technical education programs ($453,000); after-school learning centers ($464,000); teacher-principal training and recruitment ($923,000), and adult education grants ($154,000).

Department spokesman David Connerty-Marin said much of that money is "flow-through," meaning it goes directly through the state to local school districts. As a result, it would be largely up to local schools to address the losses, even as they struggle with the expiration of federal stimulus funds.

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Today's poll: Fiscal cliff

How concerned are you that you’ll be personally affected by the so-called ‘fiscal cliff’?

A lot

Somewhat

Not Very

View Results

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