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Reports Overwhelmingly Demonstrate Sequestration’s Negative Impact on the Economy

Legislative Update
February 11, 2013

In the past few days, public and private sector reports have issued that describe the looming sequestration’s negative impact on the economy unless Congress acts to avoid the 5.1 percent automatic, across-the-board spending cuts slated to begin March 1 and be fully implemented by March 27.

UMR Report: “Cuts to Medical Research Threaten 20,000 Jobs

On February 6, a new United for Medical Research (UMR) analysis projects that the nation’s life sciences sector could lose 20,555 jobs and $3 billion in economic output. Using the latest National Institutes of Health (NIH) data, UMR’s analysis calculates the impact of NIH grant funding on the nation’s economy and health and life sciences industry. The results show the magnitude of NIH’s role as an economic driver, supporting more than 402,000 jobs and $57.8 billion in economic output nationwide in 2012 alone. The analysis estimates that, if the sequester is implemented, each state could lose more than 1,000 jobs with the exception of California, where more than 3,000 jobs could be lost.

House Appropriations Committee Democrats: “NIH Faces $1.6 Billion
in Cuts

On February 7, House Appropriations Committee Democrats released a report warning of the dangers discretionary spending programs face as a result of spending cap reductions in the Budget Control Act combined with sequestration. The report states that discretionary spending will fall to 2.5 percent of Gross Domestic Product (GDP), an historic low, even if sequestration is avoided. Regarding NIH funding, the report states that its budget has actually decreased 19 percent when adjusted for inflation, that the level of research projects supported is at the lowest level since 2002, and that NIH faces a $1.6 billion cut as a result of sequestration, “meaning fewer and smaller research projects aimed at finding treatments and cures for diseases.”

More than 3,500 Organizations Demand End to Sequestration Cuts

On February 11 at a National Press Club event in Washington, D.C., representatives from Nondefense Discretionary (NDD) United and the defense and aerospace industries joined forces to urge Congress and President Obama to put an immediate end to sequestration cuts which “threaten to send the economy back into recession and destroy more than two million jobs.” The sponsors released a study prepared by George Mason University which estimates sequestration costing 2.14 million jobs-1.05 million from spending reductions at domestic discretionary agencies and 1.09 million from defense reductions. “These losses would fall across all job descriptions from manufacturing to retail, from professional business services to federal workers and from researchers to nurses,” according to the study.

NAEVR has participated in NDD United, including Capitol Hill rallies to urge Congress to avoid the sequester. Both NAEVR and ARVO are among the 3,500 signatory organizations on July 2012 and February 2013 letters to Congressional leaders urging them to avoid these mandatory budget cuts by taking a balanced approach to deficit reduction.