Defense contractors, airline travelers, National Guard members, and even college officials are concerned about the possible impacts of federal budget cuts that could impact Connecticut.
The state’s Congressional delegation and top leaders in Washington are hoping for an eventual deal to avoid the brunt of the automatic spending cuts that will start Friday after Congress failed Thursday to reach a solution to block the budget-cutting process known as “sequestration.”
The cuts represent only a tiny percentage of the overall federal budget, but both federal and state officials have raised concerns about potential reductions to military contractors that include East Hartford-based Pratt & Whitney, Groton-based Electric Boat and Stratford-based Sikorsky.
After attending a briefing Thursday with Transportation Secretary Ray LaHood, U.S. Sen. Richard Blumenthal told Capitol Watch that any cutbacks in air transportation would likely not be made at the nation’s biggest and busiest airports.
“No decisions have been made yet about the specific airports or the air traffic that might be shut down,” Blumenthal said in a telephone interview. “Certainly, Tweed is one of the airports that might be at risk because it’s smaller.”
Tweed, which is near Long Island Sound and the New Haven – East Haven border, would be more vulnerable to cuts than a larger site like Bradley International Airport in Windsor Locks, he said. The airport, which is owned by the city of New Haven, was named more than 50 years ago after John H. Tweed, who had served as the facility’s manager.
The cuts represent $85 billion out of an overall federal budget of $3.8 trillion – and only about $44 billion of the cuts are for the current fiscal year. Some major federal programs, such as Social Security, food stamps, veterans benefits, and military salaries, are exempt and will not be touched.
Connecticut companies hold about $15 billion per year in defense contracts that cover everything from building submarines to helicopters to jet engines that are placed in military fighter planes. The cuts could also reach civilian workers at the submarine base in Groton and the Connecticut National Guard.
“There is no ton of bricks or earthquake or government shutdown coming on March 1 or the end of March,” Blumenthal said in an interview Thursday. “But there is a cascading effect on government services and the economy.”
U.S. Rep. Joe Courtney, in a video released by his office, said the scheduled repairs to submarines are important, and the state must avoid cuts that are penny wise and pound foolish.
“It’s like saying you’ll save money by not doing an oil change on your car,” Courtney said.
Since many of the budget cuts will be phased in over time, the March 1 deadline on Friday was seen by some as less than dire because the cuts would not have their full impact until a later date.
But others have complained that the potential cuts have been over-hyped and overblown.
“I’m probably as frustrated as anybody about the lack of cooperation down in Washington, D.C. and further frustrated, to be blunt, by the President going around the country as if he’s in campaign mode rather than sitting down with the Republicans and trying to get to compromise,” state Senate Republican leader John McKinney of Fairfield said when asked by Capitol Watch.
McKinney blames Obama in large part for the current crisis atmosphere, saying that he has not seen Republicans traveling around the country and making similar campaign-style speeches.
“Sequestration was his idea,” McKinney said of Obama. “He offered it. He signed it. Republicans and Democrats voted for it. Why they’re not all in the same room together, trying to find a solution, is beyond me. The President can’t be going to places like Virginia and giving campaign speeches and then turn around and say, ‘Why aren’t you guys compromising with me?’ The bitterness of their tone, on both sides, is preventing them from sitting down and talking.”
McKinney added, “The amount of money they’re talking about in terms of the federal budget – and we’re talking about a very small decrease in the increase in spending – you would think they would be able to solve in an afternoon meeting.”
Earlier this week, U.S. Rep. Jim Himes of Greenwich said he still had hopes of avoiding the cuts.
“I wouldn’t rule out a last-minute deal,” said Himes, a Democrat who defeated U.S. Rep. Christopher Shays to win his seat in 2008. “I wouldn’t rule it out. But you know in my four years in Congress and certainly the last two years, what I’ve learned is deals don’t get done until there is a feeling of crisis. My hope is – and in any responsible government – we would get this deal done before the first of March. So it’s still possible, but I fear that we are going to really need to see and feel some pain to get the leadership to do the deal that we can all support.”
The potential federal budget cuts are not just for military contractors.
At the University of Connecticut, spokeswoman Stephanie Reitz said that about 80 percent of the research grants to the school are from federal agencies.
“We’re definitely watching this closely,” Reitz told The Hartford Courant’s Kathy Megan, “and I think every research institution in the U.S. is very closely watching it.”
Reitz said that federal funding has long been the largest external source of research funding support at UConn. Close to $100 million of the $122 million awarded overall in the last budget year came from federal sources.
She said it’s difficult to know at this point to what degree UConn’s federal grants will be affected.
“It’s difficult to say yet how our researchers would be affected because so many factors would be in play,” Reitz said in an e-mail. “For instance, some federal agencies have indicated they might maintain the current funding already promised for current grants while reducing future programs. Others might make immediate changes.’
“As you can imagine, this leaves uncertainty for our researchers, particularly those working on multi-year grants who are in the midst of their projects and those who are preparing grant applications and awaiting word on whether the money would be there to fund those that are selected. Our fervent hope is that the issue is resolved and any worst-case scenarios can be avoided.”
The largest sources of UConn’s federal research funding were from the National Institutes of Health and the National Science Foundation ($25 million and $22 million, respectively, last year) and the federal departments of Agriculture and Defense ($12 million and $9 million).
“With the federal Budget Control Act and the threat of sequestration, we already had anticipated that federal support for research was going to be flat at best,” Reitz said in an email, “and will grow only slowly over the next few years, and certainly not at the pace it has over the last decade.”
In Washington, the U.S. Senate held two votes Thursday that failed to resolve the situation.
“Budget sequestration is the height of insanity and a sad example of governing at its worst,” U.S. Sen. Chris Murphy said. “Congress has to stop taking people’s jobs and our entire economy hostage to its own dysfunction. I strongly opposed the legislation that set this process in motion, and I strongly support this legislation to prevent the damage that these reckless cuts will do to our still fragile economy.
“The American Family Economic Protection Act would have eliminated these across-the-board cuts, and replaced them with smarter, balanced spending cuts along with revenue raised from implementing the Buffet Rule. It would have also protected the tens of thousands of defense jobs in Connecticut and countless more in nearly every sector of our economy.”
Murphy added, “It’s time for Congress to come together and work to make this right.”
After the Senate votes Thursday, Obama released the following statement:
“Today, Republicans in the Senate faced a choice about how to grow our economy and reduce our deficit. And instead of closing a single tax loophole that benefits the well-off and well-connected, they chose to cut vital services for children, seniors, our men and women in uniform and their families. They voted to let the entire burden of deficit reduction fall squarely on the middle class.
“I believe we should do better,” Obama continued. “We should work together to reduce our deficit in a balanced way – by making smart spending cuts and closing special interest tax loopholes. That’s exactly the kind of plan Democrats in the Senate have proposed. But even though a majority of Senators support this approach, Republicans have refused to allow it an up-or-down vote – threatening our economy with a series of arbitrary, automatic budget cuts that will cost us jobs and slow our recovery.
“Tomorrow I will bring together leaders from both parties to discuss a path forward,” Obama added. “As a nation, we can’t keep lurching from one manufactured crisis to another. Middle-class families can’t keep paying the price for dysfunction in Washington. We can build on the over $2.5 trillion in deficit reduction we’ve already achieved, but doing so will require Republicans to compromise. That’s how our democracy works, and that’s what the American people deserve.”
The Hartford Courant’s Brian Dowling reports:
The state’s defense contractors were still waiting on details about the how the cuts would impact their programs and businesses. Electric Boat and Pratt & Whitney said on Thursday that they were waiting on more information.
“We simply do not know how the cuts would be applied on programs,” said Pratt spokesman Ray Hernandez. “The threat of sequestration has created a great deal of uncertainty in the industry and its effects can already be felt, especially in the supply chain, where decisions on hiring and capital investments are being suppressed.”
For Pratt’s parent company, Hartford-based United Technologies Corp., the cuts would land on about 17 percent of its revenues that come from the Pentagon. At an investor conference last week, the company’s CEO Louis Chenevert said, “The impact on our business would be limited in 2013 at this time, with more impact in 2014.”
At Kaman Corporation, an aerospace manufacturer in Bloomfield, the sequester could, at most, mean about a 4 percent drop in its aerospace revenues for 2013.