Budget Deal and Its Effect on Federal Spending in Maryland

In an opinion piece in the Baltimore Sun, Jay Hancock speculates what the budget deal means for federal spending in Maryland.

Maryland’s massive reliance on federal dollars means that even small changes in the U.S. budget mean large consequences for the state that mostly surrounds the District of Columbia. The changes announced Monday are not small.

How much Maryland’s federal revenue will shrink — as well as when and where — is far from certain. But there is no new tax revenue in the debt-ceiling deal that might have reduced the need for large cuts. Both stages of spending reductions in the pact take direct aim at defense while largely sparing social programs.

According to Anirban Basu, “the best solution would be adjustments made to Social Security, Medicare and Medicaid.”   However, that is  not what’s happening.

The deal’s first stage cuts $350 billion in defense spending over a decade, with most cuts postponed until later. The second stage depends on a bipartisan committee that will meet this fall. But a failure by the committee to reach a deal — a likely outcome, given the rancor in Congress — would automatically trigger new cuts of $1.2 trillion after 2013, with fully half of them in defense.

An article in Stateline further addresses the uncertainty facing States.  While its clear that federal aid will be reduced, which programs and exactly how much is unclear.

That’s because the deal, which the U.S. House passed Monday night (August 1), leaves a lot of choices hanging into the future. It calls for $917 billion in deficit reduction over 10 years by setting caps on discretionary spending. But exactly how to meet those caps — and what funds to states might be cut — is a question for Washington to answer another day. Also undetermined is how much a joint congressional committee charged with finding another $1.5 trillion in deficit savings would cut from aid to states.

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