D.C. Budget Cuts Could Devastate San Diego Economy
Thursday, August 23, 2012
Erik Bruvold, President, National University System Institute for Policy Research
Carl Luna, Political Science Professor, Mesa College
A new report finds that San Diego’s economy will fall hard come 2013, enough to go back into a recession. That’s if a deal for severe federal budget cuts and a tax increase pushes the nation off a “fiscal cliff.”
The National University System Institute for Policy Research says the impact from across-the-board budget cuts and a repeal of the Bush Tax Cuts will hit San Diego’s economy between $4.3 to $5.9 billion. That would be 20,000 to 30,000 jobs lost locally alone.
Erik Bruvold, president of the National University System Institute for Policy Research, which conducted the study on the federal budget's impact on San Diego, told KPBS’ Midday Edition that San Diego will experience an even greater downturn than the rest of the nation.
He said San Diego has a large military presence and military contractors would be targeted by those budget cuts, plus the expiration of the Bush Tax Cuts would hit certain San Diego families more than just the average taxpayer because their incomes are higher.
Carl Luna, political science professor at Mesa College, said on KPBS’ Midday Edition that both parties are at a stalemate now until the November election, which will hurt the public financially if there’s no solution come January.
“Have an extra glass of champagne on New Year’s Eve this year, it won’t matter because you’re going to have a big hangover come January 1 no matter what,” he said.
Bruvold agreed that nothing to change the situation will happen until after the election. He said neither party wants to stick its neck out too far before November.
“Neither side I think at this point wants to have a compromise that could be spun by the other side as being an advantage or demonstration of presidential leadership or Congress getting back and sort of leading,” he said. “I think you’ll see it after the election if you do.”
The Obama Administration supports extending the Bush-era tax cuts for everyone except the wealthiest 2 percent of Americans. Bruvold said this would reduce the financial impact in San Diego by about $1 billion.
“In San Diego county, rather than if everything expires, taxes go up around $3 billion. If just the taxes go away for upper income earners we go up about $2 billion,” he said.
According to San Diego Mayor Jerry Sanders, cuts to the defense budget would hurt defense contractors in San Diego more than the military. Bruvold said that since the president is going to maintain military salaries, there’s a $1.1 billion reduction in San Diego. If Obama’s administration reduces the number of personnel instead, there’s a $1.7 billion reduction.
Luna said neither party is motivated to develop a solution to avoid this fiscal cliff. Instead, he said, they are getting their traction trying to “beat up the other side” going into the election.
Diana Crofts-Pelayo contributed to this story.
To view PDF documents, Download Acrobat Reader.