How Sequestration Will Impact Your State

The White House has released state-by-state estimates of the impact of sequestration on different communities, and the Washington Post has aggregated it all into a useful tool.

It’s worth your time. Something I’ve noticed over the past few weeks is that a lot of people have fallen into the odd conceit that the economic impact of sequestration is somehow going to fall overwhelmingly on Washington, D.C., and its immediate environs. This is connected to the also-odd conceit that the relative economic strength of the D.C. metro area in recent years is a direct consequence of high or rising levels of government spending. In fact, government spending has fallen for the past three years, and the D.C. metro area continues to prosper. It’s a huge analytic error to assume that the amount of money donors and businesses are willing to pour into advocacy and lobbying efforts will be directly proportional to the level of federal outlays (among other things, people also fight over tax and regulatory policy!), and as a prosperous and highly educated region of the country, we are in some ways unusually well-positioned to weather some disruptions. 

A particularly large blow is going to fall on jurisdictions that for one reason or another get a lot of federal education funding through the various formulae that drive such things. D.C., for example, is not going to enjoy the loss of $533,000 in general K-12 education money or the additional $925,000 in funding for students with disabilities. But Wyoming, with slightly fewer residents, is treated much more generously by the funding formulae and thus will get a much bigger ax under sequestration, losing more than $2.6 million in overall school funding.

And so it goes across the board. Obviously this will pinch D.C. to an extent, and low-income people will suffer the most, but the District actually has a budget surplus and can plug some of the most severe funding gaps that will afflict low-income residents. Meanwhile the prosperous side of D.C. will continue cashing checks from the Koch brothers, from Pete Peterson, from defense contractors lobbying to get their funding back, and from everyone else. Worry about, say, Nevada, which houses a lot of federal military facilities that will be losing work and where the state budget picture can ill-absorb big cuts to its public schools and job placement efforts.