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PHOENIX -- Up to $500 billion in automatic defense cuts could take effect in January if congressional leaders can't reach a deficit reduction deal, according to Reuters.

Lee McPheters with Arizona State University's W.P. School of Business said Arizona's defense industry, which includes contractors Boeing, General Dynamics, Lockheed and Raytheon, could see cuts of about $2 billion, at a time when the states economy is beginning to refire.

McPheters said that could cost the state 10,000 direct defense jobs but that number will likely double with the trickle down.

"Those jobs support everything in the community," he said. "Everything from grocery stores, doctors, real estate and so forth. So you get a double whammy."

Arizona Republican Congressman Jeff Flake said spending cuts will leave no area of government untouched.

"I hope the Senate does what the House did where we say we need to hit the targets but we should take it from mandatory spending, not defense," he said. "I know that's the direction that senators McCain and Kyl want to go."

McPheters said cuts would be a step back for the state's recovery.

"We're actually seeing manufacturing improve in the state and of course so many of these defense contracts involve high-tech manufacturing," he said.

Jim Cross, Reporter

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