Debt Ceiling Agreement Likely Puts Cap on State, Local Government Spending

Now that the debt-ceiling agreement has been reached, where do budget cuts leave federal, state and local governments?

It appears there may be more state and local budget cuts to go along with reduced federal spending for fiscal year 2013, which begins July 1, 2012.

Show Me Cuts

At the state level, Missouri Watchdog reports that the state is preparing to reduce its fiscal year 2013 budget, although officials project tax revenue will increase by 2 percent.

State of Missouri Budget Director Linda Luebbering said the 2013 budget gap is driven by the need to replace $460 million in one-time federal budget stabilization and education funds in her 2013 budget instructions.

Darned If We Don’t

At the national level, a St. Louis Post Dispatch article stated that the debt-ceiling agreement may be complete, but the federal budget work is just beginning. Many federal programs will be affected.

Washington Times columnist Jim Picht said the debt-ceiling agreement may be too little too late to keep the United States from defaulting on the national debt. Picht said the debt-ceiling agreement will not dent the deficit but simply will reduce the rate at which the country borrows money.

Darned If We Do

The Huffington Post's columnist Bob Cesca takes the opposite approach. Cesca said that cutting the deficit during a slow-growth economic recovery is “phenomenally stupid” largely because it will stagnate job growth. Cesca said the move could send the country into another recession.

The Huffington Post also reports that Defense Secretary Leon Panetta said he will fight defense budget cuts that undermine the country’s ability to defend itself and to support military members and their families.