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New Study Reveals How Federal Budget Cuts Affect Mass.

moneyHADLEY, Mass (WGGB) –When automatic federal budget cuts, or the Sequester went into effect earlier this year, it affected a variety of areas, from Head Start, to the military, to Medicare reimbursements.

Many government workers braced themselves for the effect they’d have.

Thanks to a new study by UMass’ Donahue Institute, that picture has gotten a lot clearer. “The state has been so successful in particular with the NIH grants, science foundation grants, the defense sector here in Massachusetts. Over $11 billion goes to defense contracts. So it’s a big deal for the state,” said Daniel Hodge, the Institute’s Economic and Public Policy Director.

Hodge found that more than $1.3 billion has been slashed from Massachusetts which creates a domino effect.

Nearly 14,000 jobs were lost in the state alone for federal fiscal year 2013 alone.

The cuts didn’t just affect government employees, but private, and non-profit organizations.  “The less spending and income people have, the less likely they are to spend and go out. It hurts retail trade, restaurants, leisure, A whole bunch of other industries,” Hodge added.

The study also estimates more than 12,000 jobs will be lost in fiscal year 2014. “People can manage w/ith one year, short term cuts, but not a new, lower reality in terms of spending,” stated Hodge.

Earlier today, congress passed a bill to ease those spending cuts, but Hodge says it doesn’t fix everything, since the sequester’s effects could be felt into 2021.


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