All signs point to a million defense jobs lost

By U.S. Chamber of Commerce,

While no one knows for sure how or if Congress will address the pending fiscal cliff – the combination of tax hikes and spending cuts scheduled to take effect at the end of the year – one thing’s for sure: there’s a growing consensus that scheduled cuts to the defense budget are going to cost the nation lots of jobs.

A National Association of Manufacturers study found that the defense spending cuts included in the budget “sequester” that was adopted last summer as part of a deal to rein in the soaring national debt would result in 1 million jobs lost by 2014.

“This job loss will increase the unemployment rate by 0.7 percent and decrease GDP by almost 1 percent by 2014. The report shows that the long-lasting effects of these cuts will be felt by not just by the defense equipment supply chain, but also the everyday Americans who are protected by these products.”

The Washington Post reports:

“The job losses would probably include about 750,000 private-sector positions, including about 100,000 jobs in manufacturing, even as President Obama is promoting manufacturing as key to the nation’s economic recovery.

The NAM study, which was conducted by the Interindustry Forecasting Project at the University of Maryland, projects that the aerospace industry could lose 3.4 percent of its jobs by 2015 because of downsizing at the Pentagon. Shipbuilders could shed 3.3 percent of their workforce by 2014. And the search and navigation equipment industry could see employment drop by nearly 10 percent by 2016.”

This is far from the first (or last) report on this topic, according to the Post:

“The report is the latest in a growing heap of studies warning of dire economic consequences if policymakers fail to avert about $100 billion in cuts to the Pentagon and non-defense programs next year.”

•The Bipartisan Policy Center also found that sequestration could cost the U.S. more than one million jobs in 2013 and 2014. All without putting a dent in the federal debt.

•The Aerospace Industry Association’s analysis conducted by George Mason University found that defense budget cuts would result in the loss of one million jobs (and lower GDP growth by 25%).

•And an October 2011 study from George Mason University showed that the planned cuts, combined with defense reductions already set to go into place, would cause — you guessed it — more than 1 million job losses across the nation in just one year.

Even Congress appears to be showing some concern about the economic impact of sequestration.

“The Senate approved an amendment to the recently passed Farm Bill that requires the Obama administration to say how it would implement the cuts and to detail the impact on the Pentagon and other federal agencies. If the measure passes the House, a report on the defense reductions would be due in August.”

We can study the issue ad nauseum, but it seems pretty clear – cuts to defense spending equals lost jobs.

The U.S. Chamber has called on Congress to work with the President to swiftly enact legislation that appropriately addresses America’s impending fiscal cliff.


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