Spending cuts loom large for D.C. area

Washington and its suburbs are usually recession-proof thanks to federal government spending and employment, but the region could face the downside of that dependency if automatic spending cuts go into effect Jan. 2.

From eliminating $55 million in direct aid to the District to cutting $80 million for the Smithsonian and $2.5 billion for the National Institutes of Health, the automatic cuts would slice deeply into the major economic engine that powers the metropolitan region.

Local officials worry the reductions will cast a ripple effect, costing many residents their jobs and diminishing the quality of some public services.

"If they lose their funding, people will lose jobs, which would obviously reduce the number of people who are employed in the city," D.C. Mayor Vincent C. Gray, a Democrat, said Monday. "We're making such substantial gains in reducing unemployment in the city, but one of my fears is that we're starting to go back the other way."

The automatic spending cuts, or "sequestrations" in budget speak, were set in motion by last year's debt deal.

The first wave of $109 billion, split evenly between defense and domestic spending, is set to take effect in January unless Congress and President Obama can agree to head them off by passing other spending cuts, tax increases or a combination of the two.

Mr. Obama on Friday, obeying a new law, laid out just where the cuts would happen.

The nondefense cuts include $44 million in aid to the District's court system and another $11 million for city education, pensions, economic development and emergency planning.

Other, larger cuts could have a much more harmful effect on Maryland and Virginia, where residents make up much of the federal government's workforce.

The cuts would reduce staffing and salaries at agencies such as the Woodlawn, Md.-based Social Security Administration, which stands to lose $467 million that could come virtually entirely out of personnel costs.

The National Institutes of Health, based in Bethesda, would lose $2.5 billion in total funding while the Suitland-based U.S. Census Bureau would be hit with $79 million in cuts.

In its report last week, the White House's budget office singled out the NIH cuts as particularly devastating to its mission.

"The National Institutes of Health would have to halt or curtail scientific research, including needed research into cancer and childhood diseases," the report said.

It will also hurt the bottom line for federal contractors who rely on the government for business, spreading the pain into the private sector here.

"The onset of harm to the economy will not wait until year-end," the Loudoun County, Va., Chamber of Commerce wrote last week in a letter to Congress and Mr. Obama. "The very notion that the fiscal cliff exists has increased uncertainty, which has already begun to slow down consumer spending and hamper business investment."

Other regions could see their share of hits, too.

A $490 million cut at the Centers for Disease Control and Prevention would hurt in Atlanta, where the CDC is based, while NASA faces about $1.5 billion in cuts.

The sequesters have become a major political issue in this election year.

Republicans accused Mr. Obama of being the architect, and say he is to blame for the fact that they fall so heavily on defense.

Mr. Obama, meanwhile, pointed to Republicans who called the debt deal a success.

Both sides have said they never intended the cuts to take effect, but they have been unable to agree on a way to replace them.

Last year's supercommittee failed, and since then both sides have dug in, with the GOP saying domestic spending should see a deeper cut so defense spending can be spared, and Democrats saying taxes must be raised to preserve worthy programs.

D.C. Council member Jack Evans said his city is already planning to do without the money in next year's budget but that he does not expect citizens will be able to adjust so easily.

"It'll be the working-class and middle-class people who suffer the most," said Mr. Evans, a Democrat. "I don't know where the compromise is going to come, to be honest with you."

• Tom Howell Jr. contributed to this report.

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