Military cuts pose threat for Solano, state
WASHINGTON — Tens of thousands of California jobs are at stake as the Pentagon rolls out plans to reduce its budget for the first time since the 1990s.
Though California is far less dependent on defense dollars than it was two decades ago, when drastic cuts cost the state nearly 500,000 jobs, communities from Fairfield to San Diego will feel the pinch.
Nearly 126,000 California jobs could be affected if defense spending shrinks by $1 trillion as anticipated by the Pentagon, according to an economic analysis by the Aerospace Industries Association.
The Defense Department recently announced plans to trim spending by $487 billion over the next 10 years. In addition, a stalemate over how to reduce the debt will trigger up to an additional $600 billion in cuts unless Congress finds a way to circumvent procedures it agreed to last summer.
The reductions come at a time when more than 2 million Californians — 23,000 in Solano County — are already out of work.
“In the 1990s the military shed more men and women in uniform, but they shed them into a healthy and growing economy,” said Rep. Howard “Buck” McKeon, R-Santa Clarita, chairman of the House Armed Services Committee. “(Today) they will be competing in a much tougher jobs market, one where the unemployment rate for . . . veterans is much higher than the rest of the population.”
More than one in 10 federal defense dollars — nearly $57 billion — is spent in California, the second largest beneficiary behind only Virginia, according to a study by Bloomberg Government.
Measuring actual impact state-to-state is speculative until the federal budget is released Feb. 13. But California installations, like Travis Air Force Base, are susceptible as the Pentagon shrinks ground forces and delays large-scale military purchases.
Travis, the largest employer in Solano County, is home to almost 15,000 active duty and civilian personnel and contributes some $1.5 billion annually to the local economy. Included in the total are such items as payroll, construction projects and an estimated 5,000 jobs created in the community because of the base’s presence.
Base resources that don’t necessarily have a community economic impact — including on-base retail sales and the worth of 6,494 acres of land, the C-5 Galaxies and other planes, the buildings and other assets — total about $13.5 billion.
Travis handles more cargo than any other U.S. military terminal, making it potentially vulnerable as the Defense Department trims fighter and cargo aircraft.
The Pentagon announced last week that it would seek congressional approval for another round of base closures, but it has not indicated that Travis — or any California military installation — will be targeted.
However, the impact of reduced spending could reverberate in the form of reduced spending and employment in communities across the state.
“We aren’t just talking about direct uniform jobs or jobs in the defense industry,” McKeon said.
The call for reduced defense spending comes in response to rising budget woes and the recent withdrawal of troops from Iraq. Defense Secretary Leon Panetta indicated the largest savings could come from cuts to major weapons systems and reducing ground forces, with heightened attention to Asia.
While California could lose lucrative contracts, it could benefit if troops are repositioned on the West Coast.
Military spending is key to California, where the 11 percent unemployment rate is the second highest in the nation. Nearly 237,000 defense personnel are spread among 348 military facilities, accounting for nearly $62 billion in annual tax revenue, according to the Census Bureau.
“Make no mistake,” Panetta said at a news conference at the Pentagon on Jan. 26. “The savings that we are proposing will impact all 50 states and many . . . congressional districts across America.”
Unlike the mid-1990s, when California absorbed half of total defense personnel cuts from base closures, downsizing is more likely to have a severe effect on heavily defense-dependent states including Virginia, Hawaii and Alaska.
Defense was once California’s largest industry, constituting 14 percent of the state’s GDP at the height of the Vietnam War and 10 percent during the Cold War. Today it is only 3 percent.
No state was hit harder than California when it lost as many as 375,000 defense-related jobs in the early 1990s, according to a report by the RAND Corporation, a nonprofit think-tank.
The state has lost at least 28 major bases, including Vallejo’s Mare Island Naval Shipyard, since Congress approved the first round of closures in 1988, costing the state billions of dollars in annual revenue.
“The cuts disproportionately hit California,” said H.D. Palmer, spokesman for the state’s Department of Finance. “The state’s economy has been more diversified since then.”
Defense spending boosts California’s economy in a variety of ways, creating jobs in technology, construction, manufacturing, alternative energy and cyber security.
“There’s a recognition on the part of government that base closures can have major effects on communities,” said Christopher Hellman, a defense analyst for the National Priorities Project, adding that the state is too “cash strapped” to offer tax incentives or benefits to keep jobs at home.
Increased investment in remote warfare — including cyber security programs and unmanned aircraft — where California has a technological edge, could soften the fiscal blow.
But California’s top private contractors, particularly aerospace industries, are already cutting jobs and relocating from the expensive coast in anticipation of reduced military spending.
Boeing Co. announced plans last January to cut 900 jobs in Long Beach and both Northrop Grumman Corp. and Lockheed Martin have announced plans to cut jobs across the U.S. and Southern California, in a huge blow to that region’s aerospace industry.
The cuts could also trickle down to research universities, many of which rely on federal grants to sustain competitive programs.
“Research programs have huge societal benefits,” said Shankar Sastry, dean of the College of Engineering at UC Berkeley. “But the pot of money that we compete for is reduced.”
The California News Service is a journalism project of the University of California Washington Center and the UC Berkeley School of Journalism. Email the California News Service at cns@ucdc.edu.
Short URL: http://www.dailyrepublic.com/?p=132709
Posted by Yousur Alhlou
on Feb 3 2012.
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Keeping fingers crossed. I am guessing Fairfield will fair better than other cities.m