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Mass. leaders examining possible debt deal fallout

STEVE LEBLANC

Massachusetts officials are trying to gauge the fallout from last week’s budget-cutting debt deal in Washington, warning the state’s coffers and key industries like defense manufacturers and medical researchers could feel the brunt of any cuts.

Of the $11 billion in federal dollars Massachusetts is set to receive in the current fiscal year, about $2.6 billion is for so-called “discretionary spending” programs that could face cuts, Administration and Finance Secretary Jay Gonzalez said.

That includes over 500 federal grants for everything from affordable housing to school lunches.

It’s not just the state that could receive fewer federal dollars as a result of the deal which calls for $917 billion in cuts. Depending on how the cuts are structured, local businesses could also be hurt.

Cuts to military spending could roll back federal dollars for defense contractors like Raytheon Co. Cuts to programs funded through the National Institutes of Health could dry up money for local medical researchers.

For now, it’s anybody’s guess what will be cut, and by how much, although about $300 billion of the $917 billion is slated to come from military cuts, Gonzalez said.

“We are going to be watching with great interest how the federal government allocates those cuts,” Gonzalez said. “These are not just numbers on a page.”

The vote, which followed months of rancorous debate, split the Massachusetts delegation.

Seven of the state’s 10 U.S. House members voted against the deal. Three other House members –  Reps. Niki Tsongas, William Keating and Stephen Lynch – voted in favor of the deal which helped the country stave off a default on its debt.

Both of the state’s Senators – John Kerry and Scott Brown — backed the deal. Brown is the delegation’s only Republican.

Rep. Barney Frank voted against the measure.

The Newton Democrat said it will hurt medical device manufacturers and doesn’t balance military cuts with nonmilitary cuts. He said the money being spent in Afghanistan and Iraq could be better spent locally.

“I don’t want to fund the Karzai regime and not fund the mayors of New Bedford and Fall River,” he said.

Tsongas supported the deal. She said the bill was better than defaulting.

“This is not the bill I had hoped we would have the opportunity to vote on,” Tsongas said in a statement. “But, there are some features of this compromise that represented steps in the right direction.”

Tsongas said the compromise begins to reduce the nation’s unsustainable deficit, including significant spending cuts to be phased in over 10 years.

Kerry also voted for the deal, even as he faulted Tea Party Republicans for using “legislative extortion” to block new tax revenues.

“The folks on the other side refused to negotiate,” he told reporters last Tuesday. “We were dealing with people many of whom didn’t understand the consequences of default, or didn’t care.”

Kerry called the nearly $1 trillion in spending cuts over the next decade “manageable.”

Brown said the deal is a down payment on efforts to get the nation’s debt under control.

“One of the reasons I came to the Senate was to help stop out-of-control spending. I voted for the compromise debt bill because it avoids default, significantly cuts spending and doesn’t raise taxes,” Brown said in statement.

The budget cutting isn’t over.

The bill signed by President Barack Obama creates a new congressional committee to recommend additional cuts. Nothing will be off limits to the committee.

“The real fight lies ahead of us,” Kerry said.

Gov. Deval Patrick said that new tax revenues need to be part of any future debate about how to curb the nation’s debt.

“I look forward to the president’s leadership on a larger, balanced deficit reduction plan that both reforms entitlement and defense programs and raises revenue,” Patrick said in a statement. “We need to invest to grow our future and cuts alone won’t do that.”

The state’s mayors urged Congress and Obama to focus on ways to boost employment and shore up the economy for struggling families.

They say the best way to help get the country back on its feet is to invest in programs that will spur economic growth.

“While the debt ceiling compromise is to be applauded for averting immediate economic chaos … it unfortunately does nothing to bolster the nation’s fragile economic recovery. In fact, this compromise may even jeopardize it,” New Bedford Mayor Scott Lang, president of the Massachusetts Mayors Association, said in a letter to Obama and congressional leaders.

Associated Press