Impacts of the Debt Control Act of 2011 on the NM Economy

The Debt Control Act, negotiated by Congress and the President in August 2011, calls for at least a $2.2 trillion reduction in federal government spending through 2021. Although the details have been left resolved pending negotiations to be concluded in November, the Act does necessitate cuts of $917 billion in the first tranche and additional cuts of at least $1.2 trillion to follow. In this brief section, we estimate the potential impacts of these cuts on New Mexico?s economy, using assumptions based on the general terms of a sequestering process that is to go into effect if negotiations fail to offer alternative budgetary outcomes.