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Va. Escapes Worst Of Recession But New Fears Ahead

But Peter Gillard, a retired Social Security worker, says people criticize government until they need it.

"The attitude is 'As long as it doesn't affect me, government is too big,'" says Gillard, a volunteer at an AFL-CIO Democratic get-out-the-vote phone bank. "But when there's a disaster, like a flood or a hurricane, what's the first thing people say? 'Where's MY government?'"

And in this state where the federal government, according to Fuller, accounts for 32 percent of the economy, candidates tread gingerly.

"You have to be somewhat nuanced in how you attack federal government because many people in Virginia understand their prosperity is in part, dependent on it," says Robert Holsworth, a retired Virginia Commonwealth University political science professor. About 375,000 federal workers live in the Washington, D.C., area.

McDonnell, the governor, has acknowledged the importance of federal government, noting that stimulus funds did help Virginia's economy, but he maintains it was only a short-term benefit.

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NEW ECONOMIC WORRIES

The recession may be over, but a new financial threat looms.

It's sequestration, the automatic across-the-board cuts that will take place if Congress doesn't reach a budget agreement soon. About half, or $56.7 billion, would come in defense, according to a report by Fuller, of George Mason and Chmura Economics & Analytics.

It's a topic Romney dwells on when campaigning in military communities, criticizing the president for the potential cuts, though they were agreed to under a deal between Obama and Republican leaders in Congress.

If the cuts proceed, they could result in the loss of more than 207,000 jobs in Virginia alone â¿¿ almost two-thirds of them in defense, according to the report. Fuller says the impact would also hit retailers, car dealers and local governments.

"People are scared, extremely scared," says Johnny Garcia, CEO of SimIS, a simulation and information security company in Portsmouth. A Navy veteran, Garcia says his business already has begun adapting to the shrinking defense business, moving into health care and manufacturing.

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