Alan Clayton-Matthews, an economics professor at Northeastern University, said the cutbacks could hamper the state’s economic recovery as well as the country’s. Clayton-Matthews calculated that Massachusetts could lose an estimated $18 billion in federal dollars by the end of the next decade, when the spending cuts wind down.
Though the federal cuts will probably not force the state or the country back into a recession, Clayton-Matthews said, he disagrees with economists who believe lowering the deficit will hasten a recovery by encouraging businesses to borrow and grow.
“That’s not a sure bet,’’ Clayton-Matthews said. “In the US economy, there’s a high level of uncertainty. Businesses might not be willing to take a risk and borrow and spend.’’
State budget chief Jay Gonzalez said the state has not estimated how much Massachusetts stands to lose, because the details of the federal plan have not been finalized. But this much he knows: “With the size of the cuts they’re talking about, there almost certainly will be a significant impact in Massachusetts.’’
Gonzalez said state government and local governments, already struggling with shortfalls, stand to lose additional federal grants. The state gets more than $200 million a week in federal reimbursement to help pay for programs ranging from Medicaid to food assistance.
The Massachusetts economy benefits from a disproportionately large amount of federal spending to state defense contractors, like Raytheon Co. and its subsidiaries, as well as from National Institutes of Health research spending, a boon to the state’s hospitals, universities, and biotech industry.
Andre Mayer, senior vice president of research at Associated Industries of Massachusetts, the state’s largest business trade group, said questions remain about how Medicare cuts, for example, will affect the state. Massachusetts has, on average, an older population than most other states, putting some hospitals at a disadvantage.
