Congress has six months to prevent the U.S. economy from falling off the so-called fiscal cliff. If Congress does not act, on Jan. 1, 2013 a mix of tax hikes and $1.2 trillion in budget cuts are set to take effect, which the Congressional Budget Office says will likely throw the country back into recession.
Most economists agree that failing to act will have about a $600 billion drag on the economy in 2013. But little discussion has been given to the direct impact on jobs, particularly in the defense sector, which will suffer from half of the budget cuts. The $500 billion cut to defense spending would be phased in over 10 years with $55 billion to take effect next year.
A recent study by the National Association of Manufacturers (NAM), a lobbying and advocacy group, found that more than 1 million private sector jobs could be lost by 2014 due to fiscal constraints. The proposed job cuts would increase the national unemployment rate by 0.7 percent and decrease Gross Domestic Product by nearly 1 percent, according to NAM.