January's Automatic Spending Cuts Spook Congress

By Reuters

But privately, many congressional aides say behind-the-scenes talks will not come to fruition until after Nov. 6, if then.

In the meantime, everyone from defense contractors to recipients of social services are beginning to prepare for the worst because of uncertainties over Washington’s ability to work out a compromise.

Robert Stevens, head of aerospace and defense giant Lockheed Martin, said the looming defense savings could prompt his company to issue layoff notices for 10,000 workers. Referring to the blunt nature of the spending reductions, Stevens told the House Armed Services Committee on July 18: “It’s not aligned with the national security strategy. It’s not aligned with technology evolution. It’s not aligned with mission areas.”

Similar worries come from a much different corner: Low-income households in January could see significant reductions in the help they receive from the government for paying winter home-heating bills - on top of other social safety net cuts.

Mark Wolfe, executive director of the National Energy Assistance Directors’ Association, said that 800,000 households could lose benefits just as winter cold snaps take hold. States are having to plan for next winter not knowing whether Congress will find a way to avoid or fine-tune the automatic cuts.

“It hurts your head to think what January would look like,” Wolfe said.

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