As the titans of the defence industry lobby Congress and the White House to block or blunt deep Pentagon spending, their most potent weapon may be the threat of issuing hundreds of thousands of pink slips to employees shortly before the November election.The $500 billion of automatic long-term defence cuts set to take place early next year were mandated under a deficit reduction law negotiated last summer by President Obama and Republican and Democratic members of Congress.
Whether as a political tactic or simply complying with a federal disclosure requirement, major defence contractors including Lockheed Martin, Northrop Grumman, Boeing and Pratt & Whitney are threatening to blitz the country this fall with notices of possible layoffs beginning in early January.
Democratic and Republican campaign organisations are saturating the 10 or so key battleground states with hundreds of millions of dollars worth of media buys trying to move the political needle one way or another. But the specter of the announcements of as many as 136,000 defence industry layoffs in Virginia, 18.400 in Colorado, nearly 42,000 in Florida, 40,000 in Pennsylvania, 27,600 in Wisconsin or 21,200 in Ohio might provide added grist for presumptive Republican nominee Mitt Romney in arguing that Obama’s economic policies have failed.
Those state-by-state projections of lost defence industry jobs were prepared by George Mason University professor Stephen S. Fuller. Some critics say the study exaggerates the likely impact of the defence cuts. But even if the threatened layoffs prove to be far fewer than that, those warnings of possible pink slips nonetheless would provide a tangible sign of spending policies gone astray that could be blamed on either party.
The nearly $1.2 trillion of automatic, across the board spending cuts planned for both defence and domestic programs in the coming decade under sequestration are little understood by officials in the private or public sector and could do a lot of damage because they are not well targeted or strategic.
As the deadline nears, the two parties have tried to distance themselves from responsibility for the automatic cuts and seek an alternative. defence industry officials complain that the across the board cuts would be the equivalent of “blunt force trauma” and that the Office of Management and Budget has provided little if any useful guidance on how to prepare for sequestration.
“We fear that the government’s reluctance to make difficult choices and apply a well-aimed fiscal razor will mean that the federal budget, and particularly defence, will get the equivalent of a shave with a chain saw,” said Sean O’Keefe, Chairman and CEO of EASDS North America and Chairman of the National defence Industrial Association.
Ross Baker, a Rutgers University political scientist, said that by threatening to issue layoff warning notices so close to the presidential and congressional elections, the defence industry is pursuing an “astute” but “cynical” lobbying strategy that will probably have the desired effect of pressuring Congress and the White House to prevent the defence cuts from taking effect.
“I think there is sufficient anxiety already about the economy,” Baker told The Fiscal Times last week. “There are so many states and congressional districts that have military-connected activities . . . and defence contractors of all kinds, from giants down to producers of small components. For those people who are working in defence plants, the notices would signal that, ‘You guys could be next applying for unemployment compensation.'”
More from The Fiscal Times:
Business Insider Emails & Alerts
Site highlights each day to your inbox.