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Sequestration Threat Continues as Focus of Defense Transition Task Force

January 28, 2013

In its second meeting since being established last April, The U.S. Conference of Mayors Task Force on Defense Transition. The Task Force continued to focus on the threat to local economies if Congress and the Administration fail to settle on an alternative to the deep, arbitrary defense and domestic budget cuts now scheduled to take effect on March 1. Scheduled cuts in the defense budget are of particular concern to mayors in cities and metro areas that are home to military facilities and the industries that support national defense.

Opening the January 17 meeting during the Conference of Mayors 81st Winter Meeting in Washington, Phoenix Mayor Greg Stanton, who Chairs the task force, said that another name for the session would be “everything you always wanted to know about sequestration but were afraid to ask.” The detailed look into the potential economic damage of sequestration and the outlook on alternatives to it was provided by Aerospace Industries Association Vice President Cord Sterling, Bipartisan Policy Center Senior Policy Analyst Shai Akabas, and Senate Majority Leader Harry Reid’s Deputy Chief of Staff for Intergovernmental and External Affairs Darrel Thompson.

In his presentation to the mayors and industry representatives in the meeting, Sterling included the results of a study by George Mason University economist Stephen Fuller that projected defense and non-defense job losses of 2.14 million if sequestration is allowed to take effect. Of particular concern for defense industries, he said, would be the loss of a highly'skilled workforce, the threat posed to small suppliers and the potential increased reliance on foreign suppliers, the reduced investment in research and development, and the increased unit costs of products. At risk, Sterling explained, is an aerospace industry that is currently operating at a $50 billion trade surplus and providing highly-paid jobs for highly'skilled workers across the nation.

Akabas delivered a detailed analysis of the “fiscal cliff” deal struck in Washington on the last day of 2012, and the upcoming battles to be fought over the March 27 expiration of the current FY 2013 Continuing Resolution, the sequester of defense and domestic funds, and the requirement to increase the debt limit within the next four to six weeks. On the sequester, Akabas noted that the cuts would occur no matter what Congress appropriates and would be made at the “program-project-activity” level. Particularly difficult, he said, would be arbitrary cuts to accounts made up almost entirely of personnel costs, such as those for Border Patrol Agents, and large procurement and construction projects.

In a discussion of what might be expected to come out of the Congress between now and the approaching fiscal deadlines, Thompson said, “It’s not likely we’ll reach some grand impressive deal to fix everything in six to eight weeks,” and a deal to avoid disaster in order to buy time to make a larger deal is a possible outcome. “If this degenerates into just another partisan tug of war, you all are going to feel the brunt of it,” Thompson said. In the House and Senate, “There has to be an opportunity to go beyond just reading talking points from both sides of our partisan bases,” he said. “There has to be some opportunity to listen to folks like you all. Your representatives in Washington have to understand what this means to your immediate front line constituents—who also happen to be theirs.”