News Column

Why States Should Care About Sequestration

Oct. 23, 2012

Bruce Krasnow

small business

In giving a short description of the New Mexico economy to a panel of journalists last year, I described the state as the Blanche Du Bois of economies.

Blanche was the delusional character from A Streetcar Named Desire (played by Vivien Leigh in the 1951 movie) who uttered the words, "I have always depended on the kindness of strangers."

From the start of the Manhattan Project and the Army and Air Force bases, to the rise of Intel, the tourism industry and the search for the next big movie production, the state has survived and thrived by attracting people and their money from elsewhere. It continues today with the lure of economic development from Spaceport America.

And there is no bigger pot of money in New Mexico than the dollars coming from the federal government, which spends money and hires employees to work at the federal laboratories, on public lands and in public service and defense throughout New Mexico.

That is why the issue of the so-called "fiscal cliff" and sequestration is so important to New Mexico.

The District of Columbia, of course, has the highest percentage of government employees in its workforce at 38 percent, with nearby Virginia and Maryland in the top five. But New Mexico is sixth in the nation with 23 percent of our workforce being part of a local, state or federal government, with the Department of Workforce Solutions pegging the number of federal employees at 31,000.

This doesn't even count the large number of contractors and subcontractors at the national labs and the Waste Isolation Pilot Plant, nor the federal procurement dollars that flow from the tribal communities.

So cuts to defense spending really would be just a small part of the impact on New Mexico. Remember, we are an entitlement state, with one-quarter of the population on Medicaid -- and one measure puts us fifth in states that get the most money from the federal government per capita ($13,578), behind Alaska, Virginia, Maryland and Hawaii.

"Most discussion regarding sequestration in New Mexico has been concentrated on cuts to defense spending," writes Amber Wallin, a policy analyst for New Mexico Voices for Children. "But the focus solely on defense cuts ignores the impacts to state education, health and employment programs that will be slashed by a total of $41 million in 2013 alone. Decreased funding will mean both lost jobs and reduced services for New Mexicans."

Sequestration was part of the budget-reduction deal reached by Congress and the White House to cut projected federal spending by $1.2 trillion by 2021. So if specific budget reduction measures are not passed by Congress before Jan. 1 -- or a consensus on new revenue -- then automatic cuts, or sequestration, kick in Jan. 1.

Of course, what happens next will depend on the lame-duck Congress that returns to Washington, D.C., after the Nov. 6 election. Don't hold your breath.

New Mexico residents have the lowest savings balances in both regular savings accounts and non-interest checking accounts, according to a survey by the Pitney Bowes Software.

Residents in the state had an average of $2,206 in checking accounts and $4,119 in savings accounts -- both represented declines from a year ago and ranked 51st for savings balances in the United States, with Arizona and Nevada having the next lowest amounts.

New Jersey tops the nation in terms of the amount residents hold in both savings accounts ($7,872) and non-interest checking accounts ($4,465), followed by Hawaii, the District of Columbia, New York and Connecticut.

New Mexico had the lowest average non-interest checking ($2,206) and average savings ($4,119) account balances of all states after respective declines of 6 percent and 9 percent. Arizona ($2,314) and Arkansas ($2,422) had the next lowest average balances for non-interest checking accounts. Arizona's average of $4,406 was also second lowest in terms of savings balances, with Nevada not far ahead at $4,697.



Distributed by MCT Information Services



Source: (c) 2012 The Santa Fe New Mexican (Santa Fe, N.M.)


Story Tools






HispanicBusiness.com Facebook Linkedin Twitter RSS Feed Email Alerts & Newsletters