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Look Who’s Singing the Sequestration Blues
Posted By Kelley B. Vlahos On July 9, 2012 @ 11:00 pm In Uncategorized | 12 Comments
For a moment just imagine that American public schools received 80% of their operating budgets from the federal government, and in an attempt to control that budget and lower the national debt, Congress voted to cut the next year’s appropriations by at least 7%. As a result, the schools cried foul and said a million teachers might face pink slips come the fall.
Do you think today’s prevailing Republicans would care? Not quite. First they’d say it was the unions’ fault. Then they’d say the schools shouldn’t have paid their teachers so much in the first place. Everyone must sacrifice in trying fiscal times. Bootstraps, belt tightening, doing their part, you know.
Think of that the next time one of these Republicans shakes down the walls and points at the sky and declares it falling over the prospect of “sequestration” — which could bring some $492 billion in additional cuts to the national defense budget over the next nine years. This is in addition to the $487 billion in reductions the Pentagon is implementing over the court of the next decade.
Yet, according to experts who make a living crunching the numbers, even cutting the gargantuan defense budget this much would merely take appropriations down to 2005 or even 2007 levels (when, if you haven’t forgotten we were still fighting a two-front war).
But that doesn’t matter. Because Washington’s top defense contractors — some of which clearly get some 80% of their revenues from the federal government (Raytheon, 78%; Northrop Grumman, 90%, General Dynamics, 75%) — say sequestration will destroy the economy and put the nation at risk.
Not only that, their surrogates in Congress, i.e., the top committee chairs and members who hold the purse strings and have taken hundreds of thousands of dollars in campaign contributions over the span of their careers, are employing this Chicken Little line as an election tactic. What better way to win votes than to scare the pants off people by convincing them the faltering U.S. economy now rests on the health of the defense industry and if it is cut, a million jobs will be lost and the country turned into a teeming mass of unemployment and squalor.
“You’re going to see pink slips flying in October from contractors across the country” unless action is taken by then, said Rep. Randy Forbes, R-Virginia. He’s one of a hyperbolic group of House Armed Services Committee members now calling for action to stop sequestration before the November election. His top five campaign contributors since 2001, by the way, include defense contractors Northrop Grumman ($62,000) and BAE Systems ($42,500).
“The reality is that sequestration not only undermines our national security, it will hurt our economy and could fundamentally tear our defense industrial base,” wailed Sen. Kelly Ayotte, R-New Hampshire, also a member of the House Armed Services Committee.
“Sequestration” is the result of Congress’s inability to come to a bipartisan debt reduction agreement last year. The deal was that the so-called “super committee” (Joint Select Committee on Deficit Reduction) would find a way to shave $1.2 trillion to $1.5 trillion from the federal budget over 10 years in a mutually satisfactory way, or else cuts would be automatic, including nearly $492 billion to defense and $700 billion in non-defense items, with the first round taking effect in January 2013.
The only way to prevent it would be for Congress to pass legislation undoing sequestration and for President Obama to sign it, something the Chicken Littles are pressuring the Democrats to do before the Nov. 6 election.
“This jobs thing has got the Democrats thoroughly panicked, and so it’s fairly hard to predict,” whether that will happen, said Winslow Wheeler, who runs the Straus Military Reform Project at the Center for Defense Information, in a recent interview with Antiwar.com.
“They’ve always caved in to the Republicans in the past, so we shall see.”
At first, the military community and its courtiers in Congress warned that national security would be at stake if the cuts held, saying the “hollowing out” of the force was at hand, and that an induced vulnerability would suddenly have our enemies picking a fight.
Here’s Gen. Martin Dempsey, Chairman of the Joint Chiefs of Staff, as recently as June 14 on sequestration:
“We would go from being unquestionably powerful everywhere to being less visible globally and presenting less of an overmatch to our adversaries, and that would translate into a different deterrent calculus, and potentially, therefore, increase the likelihood of conflict.”
But as the election draws near with no reversal of sequestration in sight, it’s not blood our hawks smell but the loss in revenues and profits. In recent days and weeks the defense industry, flush with ten years of billions of dollars in fresh contracts — weapons systems, planes, armored vehicles, drones, technology, equipment, fuel, food, information operations, war gaming boondoggles and other services — is watching some of that slowly slip away (at least down to mid-war levels).
So the industry has marshaled its own weapons of mass deception. Along with friendly lawmakers, a battalion of lobbyists (70 to 90 each on average for the top companies), antsy Beltway Bandit consultants and right-wing think tanks, they’ve unleashed a so-far unmitigated PR blitz that could very well move voters, especially in states with high concentrations of defense jobs and military, unless a counter-offensive of the truth is equally waged, and soon.
“This gaggle of Chicken Littles in Washington is quite remarkable,” observed Wheeler. “They are trying to panic Congress into increasing the budget and they’re being quite successful about it.”
In reality, he said, “the $492 billion that sequestration would reduce the budget to a number that is still $30 to $40 billion above average Cold War spending and way over what we spent before 9/11. In any case, it would be a very generous level of spending.”
Nevertheless, Lockheed Martin, one of the nation’s top defense contractors, which last year made an astonishing $4 billion in profits last year (on top of another $4 billion in 2010), announced at the end of June that it may have to issue 123,000 pre-layoff notices (white slips?) to its workers unless lawmakers stop sequestration.
Lockheed, whose Chairman and CEO Bob Stevens took home a cool $25.8 million in compensation last year, insisted that the federal WARN Act requires the company to provide such notices. This bald politicking should be laughed off the stage toot sweet. As Alex Klein at Newsweek/The Daily Beast points out, the federal act may require 60 days notice for large firings, but Lockheed admits its layoffs are merely speculative, and that the whole thing reeks of a well-publicized, empty threat. He quotes Jack Raisner, a lawyer specializing in the WARN Act, who suggested it was “political stunt making.”
“Giving a blanket WARN notice to everybody and anybody: that sounds like spite. It’s not a legitimate business feature,” Raisner said.
But this is more than business, Jack, this is war. Armed with reports touting colorful graphs and numbers crunched just the way they like it, at least two major industry associations (a.k.a. lobbies) are telling members of Congress and the press that at least a million jobs are at stake.
In June, the National Association of Manufacturers, which this year had a $1.7 million lobbying budget, released a report that said the automatic cuts would shave 1% off the U.S. gross domestic product, raise the unemployment rate by 0.7%, and kill 1 million jobs.
“This report makes it clear that these cuts will punish the businesses that create the cutting-edge products keeping us safe at home and abroad, creating a negative effect on the supply chain between large and small manufacturers,” cried NAM President and CEO Jay Timmons at his (or his press writer’s) bloviating best.
Timmons, by the way, is a former chief of staff to ex-Sen. and Gov. George Allen (R-Va.), and a former executive director of the National Republican Senatorial Committee (the party’s fundraising arm), who was twice named to the annual “Fabulous Fifty” list of movers and shakers on Capitol Hill by Roll Call magazine.
In October, the Aerospace Industries Association released its own report with similar findings — an estimated 1 million jobs lost to sequestration. It also concentrates on how state tax revenues — especially in the Washington-metro region of Northern Virginia and Maryland — would be diminished if lawmakers didn’t act fast.
“Although the aerospace and defense industry will never stop defending this country, its capabilities to do so will surely be reduced if sequestration is not stopped,” said AIA President Marion Blakey, a career federal bureaucrat. “The countdown has begun and it is now up to us to stop the clock.”
Stop the madness, say critics. To make this ongoing farce worse, “Independent” Sen. Joseph Lieberman of Connecticut and Sen. John McCain, R-Arizona, sent a letter last week to 15 defense companies asking them five questions “about the effect the potential massive cuts, known as sequestration, would have on their bottom line, employees and suppliers,” according to CNN on Friday.
Now this is lobbying dollars well spent! While not everyone would comment directly on the letter, Northrop Grumman’s spokesman Randy Belote said about sequestration, “Northrop Grumman is prepared with contingency plans. … It is [the company’s] view that the implementation of sequestration as presently mandated could have a very serious negative impact on our company, our industry and of course on the defense capacity of our nation.”
Grumman, which made $2.2 billion in profits last year, shouldn’t have too much to worry about. In a June 11 piece by The Republic Report, writer Lee Fang reported that Thomas MacKenzie, now a policy staffer for the House Armed Services Committee, is a former lobbyist for Northrop Grumman and was paid a handsome $498,334 bonus by the company in 2011, just before he left to work in the committee’s policy shop to ostensibly tackle issues that could affect — you guessed it — Northrop Grumman.
Republican Chairman Buck McKeon, of course, is the top recipient of 2011-2012 defense industry contributions ($430,850), with $50,500 from Northrop Grumman alone. As Fang also noted, “(McKeon) has defended billions of questionable projects for MacKenzie’s former employer,” including the F-35 Joint Strike Fighter program, “which is slated to be the most expensive weapon developed in human history.”
According to a report by iWatch News, which is affiliated with The Center for Public Integrity, since 2011, McKeon has “voted on average 100% in agreement with the industries regulated by the Armed Services Committee.”
Does any of this prove the lawmakers and their revolving door aides are on the pocket of the defense industry? Perhaps not decisively, but it is just one small insight into how the deck is stacked when critical issues like sequestration arise — and you can bet it’s not in favor of reformers like Winslow Wheeler, who think a trillion dollars cut over ten years is modest, at best.
Trying to set the record straight
Since 1998, U.S. military spending has reached 20% of overall federal spending and “more than half of discretionary spending levels not seen since the end of World War II,” said Lawrence J. Korb, Alex Rothman and Max Hoffman in a weekend op-ed. The military’s equipment procurement levels, in particular, have doubled from $100 billion to $200 billion in the last 14 years.
As a result, the defense industry’s profits have quadrupled in that time. Faced with losing its place on this gravy train, the industry is now arguing that it’s been a jobs creator all along.
“Defense spending is not a jobs program,” the men argue, “it is a collective effort to address the threats facing the country, assure our national security, and secure our interests abroad,” and should be set at a level dictated by “national strategy and fiscal capacity,” which right now “point towards a drawdown.”
Wheeler and the other critics will not concede the $1 million job loss number to the defense lobby, either. No one knows how the pie will be cut after Jan. 1, so “pick your model” replied Wheeler, who says secondary and tertiary job losses connected to defense have been figured in by the lobby to “crank up the numbers.”
Plus, according to reports, there are worthier areas when it comes to job creation — transportation, education, health care, for example — than defense spending, which is often capital rather than labor-driven (in other words, less jobs for the federal buck).
According to a report by the Center for International Policy, $1 billion spent by the government would create two and a half times more jobs in education than in the defense industry, and one and a half more times more jobs in clean energy production. Furthermore, a $1 billion tax cut would create 34% more jobs than if the money was spent on defense.
So, contrary to what we’re told by the invested interests, the money saved from defense spending could be put to more productive use in other parts of the economy.
“Actually, the best place to cut if you are trying to create jobs is the defense budget,” charged Wheeler.
Thanks to the distortion field, that’s not a line you hear too much on the Hill or in the media today — but it’s a good one. Let’s hope the Democrats and the few clear-headed types left in the Republican Party are listening.
Follow Vlahos on Twitter @KelleyBVlahos.
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