El Paso County Could Be Hit Hard By Federal Cuts

Congressional leaders failed to reach an agreement on raising the debt limit Sunday, with just nine days left to avoid a devastating default.

Most economists are confident that some sort of deal will be reached before the August 2 deadline, although it looks more likely it will be a short-term agreement.

“They’ll probably increase (the debt ceiling) $500 billion or $1 trillion all together. just to allow them elbow room,” said Fred Crowley, a Colorado Springs economist.

Republicans have made it clear that any compromise will come with major spending cuts. Crowley said the federal budget will eventually have to be reduced by 25-30 percent to make a dent in the $14.5 trillion deficit.

Crowley said areas that rely heavily on government funding, like El Paso County, will be hit hardest.

“In 2009, the latest numbers that exist, the federal government spent $10.8 billion in El Paso County,” said Crowley.

He said that amounts to $17,500 per person annually, much higher than the national average of $10,400 per U.S. resident.

“There will be some serious cuts and we’ll be a consequential community,” he said.

Crowley said the first programs to be affected would be Medicare and Medicaid, food assistance programs and housing loan programs. He said the real problem will come if spending cuts are too drastic.

“I think the knew jerk reaction is to cut very aggressively and, in many ways, that’s the worst thing that could possibly happen,” Crowley said. “If they cut too much too quickly, they could cause a recession at the national level.”