July 2, 2012

The looming threat of an arbitrary, across-the-board cut of an additional $492 billion from the Defense Department's budget over the next ten years was the focus of a June 15 forum in Orlando, which brought mayors together with representatives of Congress, the Pentagon, and defense industries to examine the potential damage that a cut of this magnitude — coming on top of the $487 billion defense cut already imposed by last summer's Budget Control Act — would do to the nation's military readiness, to defense-related workforces, and to the economies of cities across the nation.

Held during the Conference of Mayors 80th Annual Meeting, the forum on impact of defense transition in cities served as the first meeting of the Conference of Mayors newly-formed Task Force on Defense Transition and was moderated by the chairman of that task force, Phoenix Mayor Greg Stanton. The task force was formed in April in recognition of changes already underway in national defense policy that will produce a smaller, more flexible and mobile military force supported by a significantly smaller defense budget.

"Sequestration was never intended to be public policy," Stanton explained to forum participants. "Sequestration by its very nature was intended to be chaotic, draconian, and slash and burn, such that it would force members of Congress to be highly motivated to reach consensus on a more orderly process." Congress has not produced an alternative to the sequestration of funds set to occur on January 2, but regardless of the outcome of the current budget battle, Stanton said, "This nation's cities will be harmed, directly and indirectly, by the transition that is already occurring in our approach to national defense."

Cord Sterling, an Aerospace Industries Association Vice President, briefed participants on the results of a George Mason University analysis of the impact of sequestration on defense accounts for research and development and procurement — analysis which points to the loss of one million jobs, a drop of $86 billion in GDP, a 0.6 percent increase in the unemployment rate, and a 25 percent reduction in economic growth. Sterling explained that defense industries are reacting to budget cuts already made by cutting hiring and training and investments in plants and research and development, and by notifying investors of expected impacts on their operations and financial outlook.

Sterling said that, despite extensive analysis of the impacts of sequestration, "…the negative impacts are relatively unknown by policymakers at the federal, state, and local level." Until these impacts are understood by policymakers, he warned, "It is unlikely that a coalition of members in Congress will be able to reverse the [sequestration] legislation."

With Sterling on the forum panel was Lucian Niemeyer, a member of the professional staff of the Senate Armed Services Committee, who briefed participants on legislative activity triggered by the sequestration threat, and Patrick O'Brien, Director of the Defense Department's Office of Economic Adjustment, whose mission is to help state and local governments respond to major defense program changes, including defense industry cutbacks and base closures which, as discussed in the forum, are not expected before 2017.

The panelists agreed that advocacy of an alternative to sequestration was needed sooner than later: Unless an alternative plan can be produced in Congress prior to the elections, the problem, and the uncertainty surrounding it, will be carried over to the brief lame duck session which follows. Under the Worker Adjustment and Retraining Notification (WARN) Act, companies are required to notify employees in October that they may lose their jobs on January 2.