Sam Graves, a Republican congressman from Missouri, doesn’t like big government. “A long-lasting and sustained recovery will never be achieved through massive government spending programs,” the chairman of the House Small Business Committee wrote back in February, praising the job-creating powers of small business. That same post called for “living within our means here in Washington.”
On Thursday, Graves held a hearing on what it would mean to small businesses if the government actually took a step toward living within its means—as it’s scheduled to do in January—and it’s not pretty. Automatic spending cuts worth $1.2 trillion over 10 years begin in 2013 if Congress doesn’t act. Deficit hawks like Graves are balking as the real implications of that fiscal discipline become clear. The defense-heavy cuts (known as sequestration, in Beltway jargon) would eliminate 2.14 million jobs, nearly half of them at small businesses, according to testimony (pdf) from George Mason University economist Stephen Fuller. (We should note here that the analysis was conducted for the aerospace and defense lobby.)
Most of those projected job losses would come from federal contractors, their suppliers, and other businesses that would lose revenue when federal employees and contractors lose their salaries: their dry cleaners and car dealers and roofers and coffee shops. Some small contractors are already going out of business, as my Bloomberg colleague Danielle Ivory reports.