It's not yet certain how much pain Tarrant County might feel if $45.1 billion is lopped from defense contracts next year because of a doomsday-like budget-cutting measure. But some analysts believe Dallas-Fort Worth, which is a big weapons-manufacturing region, might get hit especially hard.
Texas could lose 159,473 jobs, according to an industry-sponsored study released Tuesday assessing the impact of defense spending cuts dictated by "sequestration," part of a compromise that allowed Congress to pass last summer's Budget Control Act.But that's if sequestration stands and the state sees a drop in spending proportional to what it now receives.And that's not at all clear at this point, stressed the study's author, economist Stephen S. Fuller of George Mason University in Fairfax, Va."Texas-based programs like Lockheed's have done OK so far," said Michael E. O'Hanlon, a national security analyst at the Brookings Institution, referring to the F-16 and F-35 fighter jet programs in Fort Worth."But if sequestration occurs, it will be harder to sustain the high-profile programs," O'Hanlon warned. "This is not meant to be an alarming statement or prediction, but I wouldn't be fully reassured by the fairly careful approach taken by the Department of Defense so far."Bernard Weinstein, an economist at Southern Methodist University in Dallas, said DFW will be affected "disproportionately because military aircraft and electronics [which] constitute a huge part of the [Defense Department] budget are so big here.""As we saw in the 1980s ... cutbacks in defense spending can have serious local economic consequences," the SMU professor told the Star-Telegram. "It's true that the Metroplex economy is much larger and more diversified than it was 30 years ago. Nonetheless, if the sequestration kicks in next year, the Tarrant County economy in particular will feel its negative effects. Not immediately, of course, but over a period of months as spending is withdrawn."At a Washington news conference where the analysis was released, two senators -- one Republican, the other a Democrat and both from New Hampshire -- warned that Beltway gridlock is doing nothing to stop sequestration.Warning that fellow lawmakers may "play chicken with security and our economy," Sen. Kelly Ayotte, the Republican, predicted 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 Ayotte, speaking at the event sponsored by the Aerospace Industries Association.The defense industry group issued a report predicting that the $45.1 billion cuts in equipment, research and development would lead to 1 million direct and indirect job losses. Fuller 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."Adding Defense Department direct spending cuts, including on uniformed services, the total reduction would be $215 billion, which Fuller estimated would lead to 2.14 million lost jobs. These would range from direct employees to servers at diners outside bases or plants. O'Hanlon questioned whether the ripple effect would be that large.Ayotte said that elected officials in Washington likely won't get serious about dealing with the issue until hundreds of thousands of defense workers start receiving notices of possible layoffs.The senator, who voted against last summer's Budget Control Act, which included the sequestration provision, said she'd support a bipartisan, short-term fix and put off a longer-term solution until later.Also speaking at the event was New Hampshire's Democratic senator, Jeanne Shaheen, who said a framework for a solution existed in proposals by the Simpson-Bowles deficit reduction commission.Asked if she now regretted voting for sequestration, Shaheen said it was part of a compromise to get the debt ceiling raised.As for creating a workable solution, 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?""We are clearly far apart," she said, referring to prospects for a compromise. And putting it off until the post-election lame duck session puts the economy at too much risk. To get the issue resolved, Shaheen said, "You've got to be willing to put everything on the table. You've got to get rid of these sacred cows."In a statement e-mailed to reporters, Sen. John Cornyn, R-Texas, sounded a more partisan note. "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," he said. "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 has already 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.Not everyone is opposed to steep cuts.O'Hanlon of Brookings acknowledged short-term problems but said big cuts could help in the long run."We need deficit reduction for a strong economy -- and for job creation -- down the road," he said in an e-mail. "That doesn't mean defense should be cut irresponsibly, but on balance defense spending reductions if done right and carefully and as part of broader deficit reduction can, and should, be good for the economy eventually."Barry Shlachter, 817-390-7718Twitter: @startelegramHave more to add? News tip? Tell us
