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San Diego Could Lose Big Without A Raise In Federal Debt Ceiling

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Aired 7/19/11

San Diego's economy could be devastated if federal officials don't solve the debt ceiling issue by August. The region depends on a healthy dose of federal spending.

— San Diego's economy would take a serious hit if the debt ceiling issue isn't resolved by the Aug. 2 deadline. U.S. Government spending represents about a fifth of the region's economic activity. San Diego gets $36 billion dollars a year in federal spending, and more than 40 percent of that is tied to the military's presence in the region. An interruption in that funding source could have a serious impact.

San Diego Could Lose Big Without A Raise In Federal Debt Ceiling
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"It's troubling in the sense, if this really were to happen, if the U.S. went into default," said Kelly Cunningham an economist at National University. "To contemplate that I guess is like peering over the cliff of a huge chasm. You think about what would happen if you fell over it."

Cunningham's research indicates the region's share of the federal funding pie has helped soften the impact of the most recent recession. San Diego gets about $36 billion worth of federal spending each year. That money goes to the military, contractor, Social Security and Medicaid recipients, and lots of other people.

"With San Diego having such a huge defense based economy, it would put us into recession. I think the defense industry has actually helped San Diego, or stimulated our economy during the recession," said Cunningham.

Forty-two percent of all the federal funding that comes to San Diego is linked to the military.

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