Defense cuts: The jobs numbers game
By CNN National Security Producer Jennifer Rizzo
Opponents of slashing the defense budget are shouting about the ripple effect that would be felt in the job market, arguing that Pentagon cuts equal job cuts. But how many jobs are really at stake when hundreds of billions of dollars are axed? That's where the numbers get fuzzy.
The Defense Department's $680 billion budget pays for over 3.1 million employees, both military and civilian. Another 3 million people are employed by the defense industry both directly, making things like weapons, and indirectly, such as working in local businesses supported by a contractor's location in a town, according to various sources. It's these big money and job figures that make lawmakers fight for defense contracts in their districts and defense contractors lobby for their contracts.
The Defense Department is already required to cut $400 billion from its budget as part of an agreement that allowed President Obama to raise the debt ceiling. The same deal created a congressional "super committee" tasked to find another $1.5 trillion in government savings over the next decade.
If the commission cannot come to agreement on where the cuts should come from by the end of November, another $600 billion would automatically be axed from the defense budget.
An internal Pentagon economic analysis projects a 1% increase in the national unemployment rate if the automatic "sequestration trigger" were to take effect, Pentagon press secretary George Little said.
And in another estimate, at least 360,000 people employed by the aerospace and defense industry would lose their jobs if $1 trillion is ultimately slashed, according to a calculation by the major defense industry trade association, the Aerospace Industries Association.
"Our position is no more. No more," said Marion Blakey, CEO of the association. "We do believe at this point with the kind of cut that has already been taken through the budget control act, that defense has been cut into the bone and we cannot have that continue."
Blakey said the group is reaching out to every member of Congress it can, including those on the super committee.
"In these discussions we're trying to make sure they understand that if you go into that trough and you go deep down, like we did back in the '90s, it is extremely expensive to climb back up, and sometimes you find you do not have the technology to do it," Blakey said. "I will tell you people are listening very closely."
Members of the Aerospace Industries Association's executive committee, including executives from major defense contractors like Boeing and Pratt & Whitney, met with Secretary of Defense Leon Panetta last week to discuss the potential far-reaching effects of the cuts.
In the past, Panetta has called the $600 billion in cuts a "doomsday mechanism." The nominee to be his deputy, Ashton Carter, agreed, saying the cuts would be devastating.
"So just the scale of it alone would lead us to have to consider truly draconian things," Carter told senators at his confirmation hearing last week. "Abandoning major weapons systems, furloughing civilian employees, and abruptly curtailing training because we couldn't pay for fuel, and so forth. That's the scale."
One defense analyst said hundreds of thousands of jobs could be lost.
"It seems within the realm of possible," said Todd Harrison of the Center for Strategic and Budgetary Assessments. The Department of Defense "itself is the single largest employer in the United States. More than the post office and Wal-Mart combined. There are multiple millions of contractors whose jobs are directly related to defense. As you're cutting back defense spending, ultimately that is going to trickle down to fewer jobs in industry and defense itself."
Others aren't convinced.
"It is the standing Washington game of finding any analysis you want and use it," said Pentagon spending watchdog Winslow Wheeler. "You have multiplier effects for the Burger King down by the manufacturing plant and the dry cleaner that is being supported by the revenue flowing into the community. ... If you use the secondary and tertiary jobs from transportation and education spending you can run up the numbers, too, but if you talk about direct labor jobs that the money creates, that is quite different."
Aside from job cuts, Harrison pointed to the separate issue of job creation, reasoning that cutting the budget could mean eliminating jobs that would have been created in the future.
"In some cases it is an opportunity cost," he said. "If we continued that program additional jobs would have been created, so by not continuing they will not be created. Jobs that would have been created a year of two or three years from now won't be created."
But one study suggests that while, of course, the Defense Department does create jobs, other industries are simply better at it. For instance, $1 billion spent on clean energy, health care or education would do far more for job creation than $1 billion spent by the Pentagon, a group of researchers at the University of Massachusetts at Amherst concluded.
Every billion dollars the Defense Department gets generates 11,600 jobs, their study contends, whereas that same investment would produce 17,100 in clean energy jobs, 19,600 in health care jobs and 29,100 in education jobs. Even a $1 billion tax cut would produce significantly more jobs than money spent at the Defense Department, it claims.
"In defense spending you are talking about huge overhead costs and a lot less effectiveness at creating assembly line jobs," Wheeler said.
In a hearing on the troubled Joint Strike Fighter Program, a Defense Department official told the Senate Armed Services committee that only 1.5% of the price of the F-35 fighter went to the cost of labor.
"The Fort Worth manufacturing, fabrication and assembly labor cost portion is less than 1.5% of the overall proposed aircraft price." said David Van Buren, principal deputy assistant secretary of the Air Force for acquisition.
Defense industry jobs, however, usually pay more, Harrison said, meaning less are created per a given amount of money.
"So for a given amount of government spending, defense would create a smaller number of higher paying jobs relative to other government spending that might create a larger number of lower paying jobs," he said.
With unemployment being a top issue for Americans, the "he said, she said" match on how budget cuts will effect jobs is not a surprise to Wheeler.
"What I think we need here is some objective entity to take a look at these type of issues," he said.
Sen. Jeff Merkley, D-Oregon, agrees and would like to see the Congressional Budget Office analyze the impact of the super committee's recommendations on jobs.
"He is discussing this idea with his colleagues," said Julie Edwards, Merkley's spokeswoman, "hoping to elevate jobs in the deficit conversation. As we talk to families in Oregon and families all over this country, their number one priority is jobs."
@natlsecuritycnn on Twitter
274892 731530Keep up the good work! 500611
439903 584066Dead written articles , Really enjoyed reading . 562977
149930 404680The the next occasion I read a weblog, I truly hope so it doesnt disappoint me around brussels. Come on, man, Yes, it was my option to read, but I just thought youd have some thing interesting to state. All I hear can be lots of whining about something that you could fix if you werent too busy searching for attention. 85184
480408 309729Some really superb info , Sword lily I located this. 185278
717724 980646I was suggested this web internet site by my cousin. Im not certain whether this post is written by him as nobody else know such detailed about my difficulty. You are incredible! Thanks! 486654
787221 286500An fascinating discussion is worth comment. I do believe which you need to write read a lot more about this subject, it will not be considered a taboo topic but typically everybody is too couple of to communicate in on such topics. To yet another. Cheers 611498
I found your blog website on google and test just a few of your early posts. Proceed to keep up the very good operate. I simply additional up your RSS feed to my MSN News Reader. Searching for forward to studying extra from you afterward!…
http://www.stornobrzinol.com/
Hi, Neat post. There is a problem along with your web site in internet explorer, might check this… IE still is the marketplace chief and a big component to people will miss your magnificent writing because of this problem.
https://www.electricpercolatorcoffeepot.com/10-top-coffee-bloggers/
Hi there, You have done an excellent job. I’ll certainly digg it and personally recommend to my friends. I'm confident they will be benefited from this website.
https://www.electricpercolatorcoffeepot.com/10-top-coffee-bloggers/
Attractive section of content. I just stumbled upon your website and in accession capital to assert that I acquire actually enjoyed account your blog posts. Any way I’ll be subscribing to your feeds and even I achievement you access consistently quickly.
http://www.dumpawaste.co.uk
The next time I read a blog, I hope that it doesnt disappoint me as a lot as this one. I imply, I do know it was my option to learn, however I actually thought youd have one thing fascinating to say. All I hear is a bunch of whining about one thing that you may fix in the event you werent too busy looking for attention.
http://www.fokuszpalyazat.hu/
I have not checked in here for some time since I thought it was getting boring, but the last several posts are great quality so I guess I will add you back to my daily bloglist. You deserve it my friend 🙂
http://www.zortilonrel.com/
Good day I am so delighted I found your blog, I really found you by accident, while I was researching on Askjeeve for something else, Regardless I am here now and would just like to say thanks a lot for a remarkable post and a all round interesting blog (I also love the theme/design), I don’t have time to go through it all at the minute but I have saved it and also added in your RSS feeds, so when I have time I will be back to read more, Please do keep up the great work.
http://www.froleprotrem.com/
Good website! I really love how it is easy on my eyes and the data are well written. I'm wondering how I could be notified whenever a new post has been made. I've subscribed to your feed which must do the trick! Have a great day!
https://www.electricpercolatorcoffeepot.com/10-top-coffee-bloggers/
Thank you for making our students have access to your site post. Your kindness is usually greatly appreciated. I've got some ongoing tasks and I wanted them to assist me with it. The only way they were able to achieve that was carry out some homework on the internet so as to help make my work faster. They came across your site along with the content on it, specially this blog post, genuinely helped them to get to good conclusions on what we needed to accomplish. Of course, I will continue to visit the site for new updates on this best and other issues interesting.
Our government should go for broke. Calculate the average mortgage balance in the US, and then distribute mortgage vouchers to people in homes. Some homes will be paid off. For those homes that are not, force banks to refinance the residual mortgages at a low fixed rate (say between 5 and 6 percent).
This will put tremendous spending power in the hands of consumers, and that will create a need for businesses to expand. At the same time, implement a slight increase of the taxes of the people that see a large reduction in their mortgage payments. This will generate more revenue to start eating into our debt.
Hedge funds broadly and the value guys in piruactlar are piling into the stock, both on the numbers above and I think they are betting on a regime change pop. The risk is the value story has been true for years yet the multiple has continued to drop.It is hard to believe the market puts almost a 50% premium on a dollar of profit from IBM, who are a no-growth financial engineering company.
Now is the time for all true patriots to write their Congressmen and put an end to these dangerous defense cuts. We need to maintain a strong defense. As it is we only spend three times on defense as the Chinese do. And we certainly don't want them to match our capabilities. We can maintain the current level of defense spending and provide modest 3-5% annual increases by cutting domestic spending 1% per year and eliminating the marginal Food Stamp, WIC, Head Start and Medicaid programs. And remember, a good portion of the defense budget goes towards protecting the vital oil supply routes to Europe, India and China. We don't want to risk punishing American consumers by creating increased oil prices and reduced imports from these countries.
I like the analysis of 1billion creates 29000 jobs in education vice 11000 job in defence. Now, simply send all the educators to boot camp and ARM them with assault rifles. There. Now they can protect our children and our freedom.
With a budget of $680 billion per year, they need to cut $200 billion per year making it $1 trillion cut over 10 years and not the $200 billion the stupid writer of this articile could not explain correctly. Without these steep cuts, this dumbass governent is just playing games.
Fine as long as they cut medicare which spends $700 billion per year by $200 billion per year also. As long as they cut discrenary spending, which is now around $650 billion per year, by $200 billion, and lets not forget social security that is also about $700 billion per year. Defense is as important and is constitionally more relevant than any of the other programs.
pull all illegals out of this country-concentrate on the USA-Companies that do not want to concentrate on the american
people-take their companies and kick them out of America. Their heart is not with us anyway..
No social security for anyone except elderly and build a strong defense and start the draft only for american men. We are being torn down before
our eyes.
Faaaaaking ID10T
It may be my eyes or my browser, but I'm noufcsed. What does the second link have to do with this situation? It never goes into our on-hand cash spending, which is what the first link is discussing.And given that the feds spent WAAAAAY more than $158b in 2007 the military budget alone was $500b+ I pretty much have no idea what you're trying to say here.
yes i challenged some value guys on their khinting and declined to be put money in because of this khinting. felt too early. as you say the value story has been true for years. some forcing incident will have to happen to cause a change in strategy/culture.
Well there goes the TeaTard arguement that "government doesn't create jobs". Looks like lots of them are created and supported by government.
Here in Florida, hundreds, maybe thousands will lose their jobs as the Space Shuttle program winds down.
I wonder what trough Halliburton, Boeing and all the other cost-overrun defense contractors will feed from in the future?
The Defense Department's $680 billion budget pays for over 6.1 million employees directly and indirectly both military and civilian. That works out to be $111,475 per employee...I don't know a single grunt making that kind of cash. Looks to me like our priorities are screwed up again. Still, if the total of $1.0 trillion in cuts does occur, that is factored in over 10 years and represents less than 15% of the total annual budget assuming that no annual increases were factored into the original numbers which we all know is not true. Factoring in the automatic annual increase assumptions, we are looking at an annual reduction in spending of 8%. If the military can't manage things without 8% of their budget, they are doing something terribly wrong.
BRAVO...so much WASTE and FRAUD in the self-serving Pentagon.....plus Boeing and Lockheed source in OVER 40 states; that's one hellova lot of CAMPAIGN cash flow, to insure Congress ignores the OBSCENE reality of sick and perverted big ticket weapons' programs, that CANNOT DEAL with goat herders and poppy growers.
Maybe what's mentioned in the peorrt is correct. one thing is not correct which is the demonstration or revolution was not started and have not continued mainly because of that you can see so many Egyptian figures and very wealthy people, millionaires even are protesting in Tahrir sqr. It's revolution against corruption, injustice, humiliation of the Egyptian in our own beloved country, dictatorship.If it was for money, people would go home when the government granted raise to the Gov. employees as well as the army people asked for democracy, and justice.Power of technology and spiritual prayers of all Egyptian (Muslims and Christians and others) will be enough to achieve what we are all hoping for and getting closer to everyday )
Why in the world would you make the assumption that the entire $680 billion goes to payroll?
Exactly what I was thinking. Simplified math for armchair economists. These guys may be a bigger problem than the deficit.
This is a perfect example of poor writing effecting the message. In paragraph one the defense budget is 680 billion. In paragraph two we are going to slash 400 billion She doesn't explain that that is over ten years. On first read it looks like the defense budget will be 280 billion. The next paragraph says they may slash another 600 billion again no explaination that it is over ten years. It looks like the defense department will OWE 320 billion dollars instead of being cut to 580 billion. I read for information. This poor writing supplies confusion instead. GET IT RIGHT!
Here's another example of poor writing: using the word "effecting" when the word "affecting" should have been used.
How much could be saved by downsizing the for-profit or number of "soldiers of fortune" currently paid at a very handsome rate by the defense budget? It is my understanding that there has been a great proliferation of such companies in the name of Homeland Security here and abroad in 1993. Their warriors are very handsomely paid and have the best armorments. According to some reports they receive about four times as much as troops in the war zones. Over 200,000 human lives have been lost in Iraq and Afghanistan, many of whom had nothing to do with 9/11.
GOOD ONE, Eleanor.....our troops get paid very little, but those MERCENARY THUGS get between $250k and up! And their OVERHEAD....OUCH!!! They too, gotta support both Rubes And Demons to 'look the other way' on absurd costs.
fast it sounded like Lex Leven so my nick name bemcae Levi, pronounced like leh-vee, I think Alexi or Alexia or Alexis or Alexa would work or maybe even Eleven if you wanna go different;) (Alivyn, Alevin, Elevyn)
____________________________________________________
IT IS FINALLY HERE. The place that the rich don't want you to know about.
Google the term "Simple Stock Cash" and click on the Top ranked non-ad site! Go to the Penny Stock section to find out what the rich do not want you to know.
This is TOTALLY AWESOME!
____________________________________________________
If this were China there would have been more than a few heads rolling for the fiasco that has been the American economy since 2009. We've shipped so many jobs overseas, maybe it is time we adopted their form of accountability.
Right we should adopt their entire system right? Because communism has worked really well for all those involved. China is successful now because of cheap labor costs and minimal property rights. If this were China we wouldn't be allowed to post our thoughts on this article. Idiot.