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Senators not optimistic about budget deal as huge defense cuts loom


The following ran in the July 17, 2012, edition of the Fort Worth Star-Telegram. Economist Bernard Weinstein provided expertise for this story.

July 30, 2012

By Barry Shlachter

 Warning that fellow lawmakers may "play chicken with security and our economy," a Republican senator predicted today that little will be done before the November election to avoid steep, automatic cuts to the 2013 defense budget.

"I do see a path, frankly, but not before the election," said Sen. Kelly Ayotte of New Hampshire, who spoke at a Washington news conference sponsored by Aerospace Industries Association.

The defense industry group issued a report predicting that the so-called doomsday cuts of $45.1 billion in equipment and development in 2013, called "sequestration," would lead to 1 million direct and indirect job losses. Stephen S. Fuller of George Mason University said that the sudden drop would add 1.5 percent to the unemployment rate and take two-thirds of next year's projected growth rate "right off the top."

Ayotte said that elected officials in Congress likely won't get serious about dealing with the issue until hundreds of thousands of defense workers start receiving notices of possible layoffs.

Also speaking at the Aerospace Industries Association event was New Hampshire's Democratic senator, Jeanne Shaheen, who said a framework for a solution existed in proposals made by the Simpson-Bowles deficit reduction commission -- if Congress was willing to act.

"We are clearly far apart," she said, referring to prospects for a solution. And putting it off until the post-election lame duck session puts the economy at too much risk. To get the issue resolved, "You've got to be willing to put everything on the table. You've got to get rid of these sacred cows."

Asked if she now regretted voting for the bill that contained sequestration, Shaheen said it was a compromise agreement to get the debt ceiling raised.

As for getting a workable solution through Congress now, she said, "It's not like we don't know what to do. We know what to do. The question is, is there the political will to get it done?"

In a statement e-mailed to reporters, Sen. John Cornyn, R-Texas, sounded a more partisan note, saying: "This is the most predictable crisis imaginable, one that will cripple our ability to ensure national security in the face of continuing threats around the globe. But Democrats are using the threat of these devastating military cuts as a bargaining chip to push through tax increases, a cynical, inside-the-Beltway strategy that won't solve this problem in a common-sense way."

Ayotte noted that Lockheed Martin CEO Robert Stevens has said that sequestration already has had a "chilling effect" on his company. Earlier, this month, Stevens said he would be forced to send out WARN notices of possible layoffs to all of his employees, including 18,000 in the Dallas-Fort Worth area, during the first week of November.

Fuller stressed that there is no way to predict how the cuts would be made or which states would be hardest hit. His projections were based on the assumption that states would be affected proportionate to the amount of defense work they have, so those with the biggest contracts -- California, Virginia and Texas -- would feel the most pain.

Bernard Weinstein, an economist at Southern Methodist University in Dallas, said North Texas defense contractors are a very likely target.

"I think we'll be affected disproportionately because military aircraft and electronics (which) constitute a huge part of the DOD budget are so big here in DFW," Weinstein said....

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