Study projects automatic cuts could cost US 1 million jobs

Automatic across-the-board cuts to the budget set for Jan. 2 will cost the United States 1 million jobs, according to a new study released Thursday by the Bipartisan Policy Center (BPC).

The job-loss projection comes from cuts to defense and non-defense spending. 

The BPC predicts gross domestic product will decline by 0.5 percent if the full $109 billion defense and non-defense sequester goes through.

The base defense and intelligence budget will be cut by $55 billion or 15 percent on Jan. 2, when politically sensitive war funding is stripped from the equation, the group said. It warned of a massive disruption in the defense supply chain that could spark massive contract litigation. 

"This is a reverse stimulus plan. That's what we are talking about here," BPC task force member and former Agriculture Secretary Dan Glickman said. 

BPC task force member Maj. Gen. Arnold Punaro told reporters that the effects of the sequester are already being felt as defense contractors reduce inventory.

Punaro said that major public companies, in their second-quarter earnings forecasts, out in July, will have to lower expectation based on the sequester.

"This is not rational at all," he said.

"There are a lot people in government and in the private sector who are acting on this already because it is the law," Gen. James Jones, former Obama national security adviser, said.

BPC is urging Congress not to wait until after the November election to address the automatic cuts in a lame-duck session. BPC task force leader and former Sen. Pete Domenici (R-N.M.) said exploding healthcare costs and low revenue must be addressed to avoid "destroying" the military.

This story was updated at 11:01 a.m.

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