On January 2, 2013 the Congress will cut at least $109 billion from defense and non-defense program in fiscal year 2013, as part of the fiscal cliff process. The result after this mandate from the Budget Control Act is that government spending will be limited each year through fiscal year 2021. So, what the Fiscal cliff really means to the construction industry is that many federal construction services, except those funded by the Highway Trust Fund, Airport Improvement Program, Department of Veterans Affairs accounts, and General Services Administration, will be reduced. The Association of General Contractors believes that these cuts could diminish investments by $6 billion, a 10 percent reduction in construction spending over the years.
So to make it even worse, the fiscal cliff could affect more than 160,000 construction jobs, and affecting important construction projects that could never be completed. The tax increases proposed from the cliff will be sufficient to lengthen the recession for the construction industry and would increase unemployment. Several federal agencies are pushing to get their budgets approved so they finish project already in design stages. The USACE for example has stated that their project are critical for the population, as every $1 spent on flood control projects, produces savings up to $6 as potential damages are minimized.