Cities near military bases and with ties to defense contractors are bracing for the impact of $500 billion in defense spending over the next 10 years.
To refresh those who’ve lost track of the situation: last year, House Republicans threatened to allow the country to default on its debt unless deficit-cutting measures were enacted. Eventually, they agreed to avoid default by allowing the country to raise its debt ceiling. But to get there, an unusual deal was struck between House Democrats, Senate Democrats, and the White House.
If they couldn’t figure out how to reduce the deficit by $1.2 trillion, it was decided, then cuts of that same amount would be enacted automatically over 10 years, split evenly between defense and non-defense spending. Those cuts, slated to begin in January 2013, are called sequestration.
The idea was that the cuts would be so unpalatable to both parties that it would force them come to an agreement. But so far, they haven’t done that. And even though Congress can undo sequestration at any time, it’s still scheduled to take effect. Now, stakeholders are beginning to sweat.
Among those would could be hit particularly hard are cities and states with close ties to the military and defense contractors.
In San Diego, home to to the West Coast’s largest Navy base, city council last month unanimously approved a resolution calling for the prevention of those automatic cuts.
Business leaders in Fayetteville, N.C., home to Fort Bragg, visited Washington last month to make their concerns about the concerns known.
And the U.S. Conference of Mayors earlier this year called on Congress to be cognizant of the impact that budget cuts could have on cities where defense activity plays a key role in the economy.
“We know some cuts will happen, but we need to be strategic, propose a solution and protect jobs to keep our momentum going forward out of the recession, not backward,” Phoenix Mayor Greg Stanton said in a statement earlier this summer.
Now, a new report allows states, cities and counties to see just how great the damage could be.
An organization called Coalition for the Common Defense has released a report that details by state, city, and county, the potential impact of those cuts. The report focuses on the impact to private-sector defense contractors in those areas.
The group authoring it is an off-shoot of the defense think tank Center for Security Policy, according to Roll Call. As AlterNet noted, the center’s leadership includes lobbyists and executives for defense contractors who have a financial stake in preventing the cuts.
The group advocates against the cuts, citing threats from Iran, North Korea, and China. It says that as a result of sequestration and earlier budget cuts, defense contractors could lose $50 billion to $63 billion annually.
States facing the biggest impact from those cuts include Virginia and Maryland — home to many of the country’s major defense contractors based in the suburbs surrounding Washington, D.C. — as well as California, Florida and Texas.
The report notes, for example, that prime defense contractors in Virginia earned more than $54.8 billion in 2011 and could face as much as 18 percent cut starting in 2013, amounting to revenue losses of nearly $10 billion annually.
The full analysis of the cuts can be seen here.
This article can be read here: http://www.governing.com/blogs/fedwatch/gov-military-communities-brace-for-sequestration-cuts.html