From the Washington Post:
The agreement could immediately lift the cloud of uncertainty over the economy. It would end a political stalemate that could have caused the United States to default on its obligations for the first time. Over the long term, the deal could help free the nation from what is fast becoming a crushing debt.
But, many economists say, the agreement could endanger the anemic economic recovery — because of both what the deal includes and what it doesn’t. The government would cut back on spending, which has softened the blow of the slowdown, while failing to renew measures, such as a payroll tax cut, that have put money in consumers’ pockets.
The debt deal represents a striking reversal from a year ago, when jobs were atop the government’s agenda and both parties were arguing over who had the best plan to increase employment. But even as the agreement threatens to tamp down growth this year and next, it doesn’t go nearly as far as financial analysts and some senior officials had hoped toward reining in the national debt later this decade.
In short, some economists warn, deficit savings are too modest in the future and too severe in the present.
The Debt Crisis Bill could possibly crater Northern Virginia’s prosperity by immediately cutting hundreds of billions of dollars out of defense spending. The defense industry is one of the engines driving the train here in Northern Virginia and has been the cause of our prosperity while other areas, even in Virginia languished with tempid economy.
In another WaPo article:
Defense firms around Washington have already been shrinking, but the proposed cuts would slice even further into an industry that is a pillar of the region’s economy, according to economists.
The proposed budget deal would cut $350 billion from defense budgets over 10 years, in the first defense reductions since the 1990s, according to the White House. But the contraction could go much further because the deal calls for the possibility of more deficit-reduction measures by the end of the year.
Under the plan, proposed by President Obama and congressional leaders, if a bipartisan committee does not reach agreement on a second round of cuts after negotiating for about four months, a “trigger” mechanism would kick in, forcing automatic cuts of $600 billion in defense programs.
What we don’t need here is unemployement. Unemployment means relocation for many. Relocation means high paying jobs and respective employees move elsewhere. The housing market recovery would be dealt a fatal wound. The Hampton Roads defense industry could also be hit, to a somewhat lesser degree. Right now, these two regions are carrying Virginia high and giving her national recognition as the place to go to do business.
The Tea Party might have just dealt Virginia a lethal blow. When America gets over its love affair with sound bites and realizes what just happened, there might be even more people leaving the area in 2012–those careless, naive legislators who stupidly ushered in a legislative sound-bite we all have to live with, regardless of consequences. They might just be voted out of office.
The road to economic recovery depends on an infusion of cash into the economy, not everyone tightening their belt.