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Automatic across-the-board spending cuts will hit the islands hard. Income and other tax breaks will disappear.

HEAR Matt Kaye's report HERE>>> 09-21 sequestrationgu.mp3

Already reeling from high unemployment and budget squeezes, the islands could see federal funds reduced for everything from schools to highways to military bases.

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Vice-Chief of Naval Operations Mark Ferguson at a house armed services hearing on so-called “sequestration” under the 2011 Budget Control Act.

Ferguson: “These reductions will translate to reduce flying hours for our air crews, fewer underway days, and training for our ships and submarines, and less maintenance for the fleet. We will make every effort to preserve quality of life and family support programs for our personnel. However, we may be forced to make selective reductions in base support services and infrastructure sustainment.”

Ferguson says sequestration will reduce fiscal 2013 shipbuilding and aircraft procurement accounts by over $4-billion dollars, slowing or cancelling contracts. army, air force and marine corps brass gave told similar stories.

Congresswoman Madeleine Bordallo says DoD would be hardest hit, but many non-defense programs, including food assistance and education, would see significant impacts though some say food stamps may be spared.

Bordallo vows to try to prioritize Pacific realignment funds, key to Guam and also the CNMI. 

But Admiral Ferguson’s comments are not encouraging:

Ferguson “The potential reductions of the Budget Control Act, beyond those reflected in our Fiscal ’13 year budget submission, will translate over time to a smaller force, with less presence, longer response times and reduced ability to provide search forces, in support of our major operational plans and other emergent needs. under these reductions, we will be unable to execute the requirements of the current defense strategy.”

The Pentagon will get socked with more than half a trillion in spending cuts over 10-years, some $54-billion next year, the same for non-defense programs.

Millions of dollars and many jobs will likely disappear from the local economies. And according to experts, could drive the nation back into recession.

Congress could choose to cancel some or all of the cuts and scheduled tax hikes. But that would add to the deficit and boost chances of a European-style debt crisis.

Politically, it’s uncertain if lawmakers fresh off elections will even be able to make a deal. They’ve failed to do so for three-years, now, and could simply decide to wait ‘til a new Congress is seated.