Tennessee braces for hundreds of millions in federal cuts

10:55 PM, Feb 22, 2013   |    comments
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By Paul C. Barton, Gannett Washington Bureau

WASHINGTON -- Unless Congress reverses budget cuts already in motion, federal spending in Tennessee -- for both defense and nondefense programs -- will nosedive more than $350 million over the remaining seven months of the federal fiscal year, with many fearing the sharp decline will harm the national and state economies.

The reductions will stem from the "sequester," the device for automatic spending cuts beginning this year that Congress put in place as part of a deficit-reduction package passed in August 2011.

Beginning March 1, across-the-board, percentage reductions are set to occur across most federal programs, in an attempt to trim spending by $85 billion before Oct. 1, the start of the next federal budget year. Over the next decade, the goal is to add another $1 trillion to deficit-reduction measures already enacted.

Key areas exempt from the process include highways, Social Security and most Medicaid and Medicare spending.

Compared with what they expected to get this fiscal year, a variety of nondefense federal programs in Tennessee will see their funding reduced by at least $101.4 million beginning March 1, with defense programs, including the salaries and wages they generate, taking a hit of at least $249.23 million. Both figures are from Federal Funds Information for States, a research organization that serves the National Governors Association and similar groups.

What's provoking loud complaints from lawmakers, interest groups and federal agencies alike is that the March 1 sequester represents more of a meat-cleaver approach to attacking overspending rather than one that prioritizes expenditures.

"This is the latest, stupidest thing Congress has done," said Rep. Jim Cooper, D-Nashville.
He said it is the equivalent of using a lawn mower to prune a garden.

"Congress is too lazy to prioritize," Cooper said.

Cooper, like other Middle Tennessee members, acknowledges he voted in August 2011 for the bill that set up the sequester process. But like other members, he did so expecting the sequester would never come into play. Instead, a congressionally appointed House-Senate "supercommittee" was supposed to devise a bipartisan plan for making thoughtful, policy-based choices for cutting spending and raising federal revenues. The supercommittee, however, gave up in late 2011 without formulating a plan.

Rep. Marsha Blackburn, R-Brentwood, said the only concern her constituents have about the sequester involves the Defense Department.

"They are very concerned about the impact on the military," she said.

As for the rest of federal spending, Blackburn said, "They see this as a first step toward getting spending under control."

Rep. Scott DesJarlais, R-Jasper, agreed that people are not as concerned about the impact of the spending cuts as they are "the deficit spending that is hurting job growth and mortgaging the future of our children and grandchildren."

Now, with the sequester approaching reality, estimates about projected state-by-state impacts of cuts to specific programs have started poring out of agencies and congressional committees.

One of the most attention-getting has come from the U.S. Army, which is projecting that Fort Campbell, Ky. -- a major economic influence on northern Tennessee -- will see a cut of $69 million over the rest of the fiscal year.

The Army is also projecting Tennessee-specific impacts that include:
-- $13.43 million cut in National Guard funding.
-- $3.05 million cut in Army Reserve funding.
-- 2,496 civilian employees furloughed.
-- 64 private sector jobs lost.
-- 89 jobs lost from decreased military construction.
-- $13 million lost for military acquisition and base investments.

Meanwhile, a report from the Senate Appropriations Subcommittee on Labor, Health and Human Services, shows that sequestration would cost Tennessee Head Start programs $10.7 million, eliminating service for nearly 2,000 children.

It also showed federal child care services would be cut $4.1 million with 2,474 fewer children served and education programs, such as those targeted at low-achieving schools, would take an unexpected hit of $770,164.

Meanwhile, other recently issued reports concern states' overall dependence on federal funding.

One from the Pew Charitable Trusts shows that federal programs subject to the sequester equal 7.7 percent of state revenues in Tennessee, compared to an average of 6.6 percent for all 50 states.

It also showed federal spending on nondefense programs equal to 3.1 percent of state domestic product in Tennessee, compared to a national average of 1.8 percent. The figure reflects the federal investment in the Oak Ridge National Laboratories, among other facilities.

Another, from Wells Fargo Securities, showed Tennessee at "moderate risk" from the sequester with federal spending equaling 4.9 percent of state gross domestic product.
And a study from Stephen Fuller, regional economic analyst at George Mason University, predicted Tennessee's total job loses from the deficit-reduction mechanisms set in place in August 2011, would total 39,120.

Sen. Bob Corker said there are better ways to make headway against deficits, primarily by reforming entitlements.

"Senator (Lamar) Alexander and I have offered specific legislation that would reduce the growth of spending on Medicare, Medicaid and Social Security by roughly $1 trillion and could be used to replace sequestration," Corker said.

"It's disappointing that rather than offering solutions to avoid the sequester he created, President (Barack) Obama has resorted to campaign-style scare tactics."

Despite having voted for the legislation that set up the sequester process, Rep. Diane Black, R-Gallatin, blamed the issue on Obama.

"The president's sequester is the wrong way to reduce the deficit. For more than a year, the president's own Secretary of Defense has said that the sequester will devastate our military," Black said in a statement.

"Nevertheless, the president has refused to put forward any plan to replace his sequester, and the Democrat-controlled Senate has not even voted on a solution. In contrast, the Republican-led House -- with my support -- has passed legislation on two occasions to replace the President's sequester with common sense cuts and reforms that would lead to a balanced budget in a decade."


Contact Paul C. Barton at pbarton@gannett.com

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