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Experts: Military Contractors Hype Economic Costs Of Sequestration

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"Experts: Military Contractors Hype Economic Costs Of Sequestration"

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Military contractors are in a full court press to prevent the automatic military spending cuts that will come into effect on January 2, 2013, an estimated $55 billion per year, if policymakers fail to avert a budget “sequester.” But while contractors are waving a defense industry funded report warning of 1 million defense industry jobs to be lost if sequestration occurs and the potential to push the U.S. into a new recession, experts are calling into question the veracity of the findings and the underlying assumptions about military spending’s benefits to the U.S. economy.

“The reality is that sequestration not only undermines our national security, it will hurt our economy and could fundamentally tear our defense industrial base,” New Hampshire Republican Sen. Kelly Ayotte (R-NH) told a Brookings Institution forum Tuesday. But skeptics warn that such dire predictions are intentionally misleading.

Center for American Progress Senior Fellow Lawrence Korb took issue with those assumption in a column last November:

It is like arguing that defense is entitled to a specific share of the federal budget or gross domestic product. The federal government should base its defense spending on the strategy it develops to deal with the threats it faces — not on how many jobs it will create or the condition of our economy.

The [defense industry funded] study, which was briefed to Congress last month, analyzed the impact of potential defense cuts on employment. This is not only inappropriate and conceptually flawed, it seems self-serving.

Military spending hawks routinely fail to acknowledge that funding domestic priorities such as education, health care and clean energy create at least 50 percent more jobs than military spending.

Korb added that sequestration cuts would more likely results in 600,000 contractor jobs lost, not one million.

And defense cuts are not an across-the-board loss for American workers. “The $55 billion wouldn’t just disappear into the ether,” said Gordon Adams, who oversaw defense budgeting for the Clinton administration. “There would be other economic benefits from borrowing $55 billion for defense.” Adams says portions of the military spending cuts will be directed elsewhere, thereby creating jobs and helping the economy in communities across the country.

Questions are being raised about defense contractor Lockheed Martin’s dire threats to cut 123,000 jobs if sequestration occurs. “The timing of it is really suspicious,” Democratic strategist Garry South told The Daily Beast, adding that Lockheed appears to be “throw[ing] itself around in the political process.”

Todd Harrison, a senior fellow at the Center for Strategic and Budgetary Assessments finds Lockheed’s warnings highly suspicious. “Will they have to lay some people off down the road, within a few months [or] in the next year or two? Absolutely,” Harrison told NPR. “But [as for] the timing of this — are they going to have to do that starting exactly on Jan. 3? I think that’s highly suspect.”

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