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If Super Committee Misses Mark, Bad News For Contractors

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Members of the so-called super committee have been meeting behind closed doors to try to reach a deal to reduce the federal deficit, but many observers are worried about what happens if they don't.
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Members of the so-called super committee have been meeting behind closed doors to try to reach a deal to reduce the federal deficit, but many observers are worried about what happens if they don't.

There’s growing concern among budget analysts that the so called "super committee" will fail to find more than $1 trillion in budget cuts. That's because the Washington region could be hit especially hard if that failure results in automatic, mandatory cuts.

The 12-member committee tasked with cutting $1 trillion out of the nation's deficit is now working behind closed doors, and its members, including Rep. Chris Van Hollen (D-Md.), are staying mum about where they’re looking to cut. Many experts don’t expect a broad compromise to be hashed out in the next few weeks.

“Most commissions, and I’ve served on one, fail," says Stan Collender, a former congressional budget staffer. "They fail miserably because they’re designed to take political issues out of the realm of politics and you can’t do that, especially when it comes with taxes and spending.” 

The committee's failure to reach a deal would trigger more than $500 billion in cuts to the Pentagon. That could cripple many contractors, who infuse millions of dollars into the region’s economy.

"It's not the doomsday scenario for the Pentagon," Collender says. "It's the doomsday scenario for contractors.

The other half of the mandatory cuts would hit state and local governments in the region hard, Collender adds.

"My guess is the governors and mayors are going to start to yell pretty quickly if they think this is going to happen," he says. "Because it will be, at the same time that state and local governments are cutting back because their other sources of revenue are going down, or at least not going up very fast, federal dollars would be drying up as well."

Transportation and education funding could see some of the steeper budget cuts, possibly by as much as 8 percent, Collender says. Congress could eventually rewrite the law and avoid the mandatory cuts worked out in the deal raising the nation’s debt ceiling, he adds, although that would anger fiscal conservatives who remain intent on reigning in federal spending. 

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