Feb. 25 (Bloomberg) -- Six o’clock usually is the dinner rush at the Athenian, when military officers and defense contractors cram into booths for gyros and ouzo at this family-run Greek restaurant in Aurora, Colorado.
Just three customers sat in the dining room at that hour one day last week.
“They’re not coming in as much as they used to,” said waitress Maddellena Wagner, glancing across the almost empty restaurant. “They’re worried that those guys in Washington will just cut everything.”
Unless Congress and the president take action this week to avert $1.2 trillion in federal spending cuts, the impact will fall directly on residents of military communities like this one -- and their congressman: Republican Representative Mike Coffman, whose suburban Denver district is home to Buckley Air Force base and an active aerospace industry.
“They need to focus on the economy, not cutting spending,” said Khaled Hamideh, owner of a gift shop near the air force base stocked with military flags. “It will influence my vote. I’m not voting for these cuts.”
Congress returned to Washington today after a one-week break with no sign of negotiations between Democrats and Republicans on the spending cuts, known as sequestration.
Speaking in Washington today, President Barack Obama urged Congress to avert the sweeping across-the-board cuts with “just a little bit of compromise.” The Democratic-controlled Senate may vote this week on a $110 billion plan to delay the cuts until 2014 by ending some farm subsidies and imposing a 30 percent minimum tax rate on top earners.
House Speaker John Boehner, an Ohio Republican, said today he would be willing to consider the proposal to end direct payments to farmers. “Certainly, I think it would be an option,” he told reporters in Washington, calling the proposal a “place to start” on the spending cuts.
House Republicans haven’t proposed a plan, saying they approved alternatives twice last year, during the previous congressional session. Since they took control of the House in 2010, Republicans have made federal spending cuts the centerpiece of their agenda. While Obama is pressing to replace the automatic cuts, Republicans say they are prepared to allow this new round of reductions to go into effect.
Voters may not agree: A Bloomberg News poll, taken Feb. 15-18, shows that 43 percent of the public blames Republicans for “what’s gone wrong in Washington” compared with 34 percent who say it’s Obama and the Democrats in Congress who are to blame.
The White House tried to increase pressure for action yesterday by releasing a report detailing how states will be affected by the federal cuts. In Colorado, about 12,000 civilian military workers would be furloughed, reducing gross pay by $68.5 million. Air Force operations would be reduced by $8 million and Army facilities by $57 million, according to the White House report.
Macroeconomic Advisers LLC said in a Feb. 19 report that sequestration would cost 700,000 jobs nationally and push the unemployment rate, which was 7.9 percent in January, a quarter of a percentage point higher than it would have been otherwise. By the end of the year, sequestration would reduce gross domestic product by 0.6 percent, according to the Congressional Budget Office.
Although the cuts would be imposed gradually, every department is facing reductions. Defense may lose $46 billion in the fiscal year ending Sept. 30, accounting for half of the savings mandated under sequestration. Beginning in late April, as many as 750,000 of the department’s civilian workers would be required to take a day of unpaid leave each week.
Airport screeners, air-traffic controllers, and customs workers were also told to expect furloughs, which could result in delays for flyers. Slaughterhouses may shut down after meat inspectors are sent home without pay, national parks would limit hours, and weather forecasts could be compromised by idled meteorologists at the National Weather Service.
Speaking at a meeting of U.S. governors, Obama said uncertainty already is affecting the economy, though the impact of the cuts may not be felt immediately.
“While you are in town I hope that you speak with your congressional delegation and remind them in no uncertain terms exactly what is at stake,” Obama said.
For voters in Coffman’s district, the expectation that cuts are coming is already squeezing the local economy.
A downturn in military purchasing and travel is softening business at local hotels and restaurants, according to Kevin Hougen, president of the Aurora Chamber of Commerce, who’s been tracking a decline in local economic activity since May. The 6th district saw more than $4.1 billion in federal contract spending last year, ranking it 19th in the country, according to a Bloomberg Government analysis of federal contracts.
“The only way the American public is going to recognize these cuts is when they go to the airport. We’re feeling it; it’s all over town already,” said Hougen.
Without action in Washington, the situation will worsen. Civilian employees at Buckley face a 20 percent pay cut. The Fitzsimons Life Science District, a former U.S. Army medical facility transformed into a science and technology center, risks cuts in federal research grants.
Reduced contract spending by the Pentagon and other government agencies would affect Lockheed Martin Corp., Northrop Grumman Corp. and other federal contractors in the area, including the 90 subcontractors on the Buckley base campus.
Coffman still supports cutting the Pentagon budget. “I don’t see defense as a jobs program,” he said in a Jan. 21 interview in his Aurora office. “The deficit-reduction target needs to happen and it needs to happen on schedule.”
Still, as the economic threats heighten, the political risks to Coffman rise.
After the 2010 census, state lawmakers remade his district boundaries from a safe Republican seat into a competitive one. Coffman won in 2010 by more than 20 percentage points in the old district. His margin dropped to 2 percentage points in 2012, and voters in the new district backed Obama by 8 points.
Democrats, who need a net gain of 17 seats in the 2014 midterms to retake control of the U.S. House, are targeting his seat for a takeover.
The House Majority PAC, a super-political action committee that spent millions in 2012 supporting Democratic candidates, is expected to weigh into the Coffman race. He already has a Democratic challenger, former statehouse speaker Andrew Romanoff, and Obama has paid the district three visits since September, most recently for an energy speech on Jan. 26.
Last week, the Democratic Congressional Campaign Committee posted its first web advertisement of the 2014 cycle, entitled: “Your pink slip -- Brought to you by Congressman Mike Coffman.”
“If this sequester occurs, everywhere Mike Coffman goes in his district, he will be defending the indefensible,” said Representative Steve Israel, a New York Democrat who is chairman of the DCCC.
Coffman and other Republicans are being counseled to blame the sequester on Obama -- even though the House and Senate also approved the spending-cut plan as part of a 2011 deal to lift the nation’s debt limit. At the same time, they are under pressure from their anti-tax Tea Party supporters to hold firm.
That means Coffman, a 20-year military veteran and member of the House Tea Party caucus, must navigate between his campaign pledge to cut government spending and the economic pressures on his military-dependent district.
Today, he plans to introduce an alternative to the sequester that instructs the Pentagon to make $500 billion in cuts to programs that aren’t related to national security.
Some of his plan, such as trimming the department’s civil service workers, could affect his district, he said. Coffman said that’s an advantage since voters in his new district will embrace his willingness to take on Pentagon spending.
“What I have is a middle path that differs from the Republicans and differs from the Democrats,” he said. “It’s kind of a selling point where people who are moderates or liberals say, ‘yeah, he’s a Republican but I like what he’s doing on defense’.”
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