Sequestration would have a disastrous effect on the construction and design industries, an AIA study released in October shows all too clearly. And given that those industries represent one in nine dollars of U.S. Gross Domestic Product, the potential budget cuts to federal construction projects would help drag down the overall economy. So argues AIA President Jeffrey Potter, FAIA, in a letter he has sent to President Barack Obama and leading Congressional figures, urging them to negotiate a deal to avoid the impending fiscal cliff—the $1.2 trillion in mandatory cuts that would result from the Budget Control Act of 2011 in lieu of a greater compromise.
“The budget sequester scheduled to take place in January would reduce federal investments in design and construction by more than $2 billion, with a potential job loss of an additional 60,000 workers across the design and construction industry,” writes Potter to President Obama, Senate Majority Leader Harry Reid, Speaker of the House John Boehner, Minority Senate Leader Mitch McConnell, and House Minority Leader Nancy Pelosi. “Tax increases on thousands of architecture firms, most of which are small businesses, and their employees and clients would cripple the ability of our profession to create jobs and grow the economy.”
Potter argues that sequestration, which would slash agency budgets across the board, would end up costing taxpayers more in the coming years because of how the cuts could lead to deferred maintenance for federal buildings. “A large portion of agency facility budgets is devoted to repairs, maintenance, and retrofits. If those funds are cut, the need does not go away. In fact, cutting these budgets by such a sizable amount will most certainly cost taxpayers more in the long run, as problems get worse and the price tag for repairs rises,” he writes.
According to the AIA's October study and the U.S. Census Bureau, federal agencies accounted for a seasonally adjusted annual rate of construction totaling $25.2 billion as of August.
The AIA's message comes as President Obama is hosting closed door negotiations with Speaker of the House Boehner and other Congressional leaders this morning—a meeting that could send the first signals about whether the two parties have made any significant progress on a compromise.