With Defense cuts looming, Congress worries about jobs

Secretary of Defense Leon Panetta speaks to U.S. troops during a visit to Kabul, June 7, 2012.

/ JIM WATSON/AFP/GettyImages

(CBS News) Congress may be facing pressure to find every way it can to save a buck, but some Republicans and Democrats are expressing concerns that looming budget cuts facing the Defense Department go too far. They say that the economic downturn doesn't change the fact that the world remains a volatile place with multiple threats that must be controlled and countered.

But it's not just national security that has congressmen concerned. When talking about the looming cuts to the Pentagon, lawmakers also cite the impact the cuts would have on the economy and job creation.

The Pentagon faces "the kind of mindless budgeting that needs to be avoided," Democratic Sen. Carl Levin of Michigan, chairman of the Senate Armed Services Committee, said at a Washington event Tuesday. "There's an agreement we've got to avoid these across-the-board, salami cuts in all of our programs."

Levin was referring to the nearly $600 billion in automatic Pentagon spending cuts scheduled at the end of the year as a result of the failure of the so-called "congressional supercommittee" last year. The cuts would come on top of the $487 billion in cuts the Pentagon is expected to make over the next five years because of the debt deal Mr. Obama made with Congress last summer.

Levin said his "best guess" is that the Pentagon could reasonably withstand $100 billion in cuts over 10 years. To come up with that number, the senior senator said he was considering "what are the threats you're going to face and how they are going to change."

Levin also pointed to the potential economic impact: "Business folks have got to plan," he said. "That uncertainty which is created by the threat, the specter of sequestration, I believe is a real threat to the economy."

A small group of senators will get the chance on Wednesday to question military leaders about the cuts in a hearing before the defense subpanel of the Senate Appropriations Committee. Defense Secretary Leon Panetta and Gen. Martin Dempsey, chairman of the Joint Chiefs of Staff, will testify before the subpanel on the overall military budget.

The economic impact of the cuts may or may not come up, but given the state of the economy and the fact that this is a presidential election year, it's sure to be on senators' minds.

"Both parties are trying to make statements about other party's job creation abilities," Laura Peterson, a senior policy analyst with the nonpartisan group Taxpayers for Common Sense, told Hotsheet. "Because the economy is foremost on voters' minds, there's not only a parochial incentive, there's also a political incentive" to consider how the defense budget impacts jobs.

"Just when you thought the economic news could not get much worse," Republican Sen. John Cornyn of Texas told reporters last month, "we have an entirely predictable and preventable jobs crisis approaching in January, where because of the [automatic spending cuts], my state alone will lose 91,000 private sector jobs."

Jobs are usually a secondary concern in any discussion of Defense cuts, but some legislators have focused primarily on the economic impact. They include congressmen in the rust belt like Democratic Rep. Sandy Levin of Michigan, where the M1 Abrams tank is produced.

"Michigan has a lot at stake in the defense industry and the defense industry has a lot at stake in Michigan," Levin wrote last year. Both Democrats and Republicans have defended the continued production of the tanks, even though the Pentagon says it can afford to halt production.

Peterson said that in the past couple of years, it has become "increasingly OK to put parochial interests ahead of national security interests in talking about defense spending." Calling it a "real departure" from the past, she added, "I think that's a result of the tack that defense companies are taking with their lobbying."

Peterson said the trend is cause for concern. "National security spending is not a jobs program, and it should never be perceived as one," she said.

"When lawmakers preserve national security spending for jobs, they're essentially arguing for what Republicans claim to be their nemesis -- they're arguing for a defense nanny state," she added. "There are plenty of studies that show if you want to throw money at the government to create jobs, there are better ways to do it."

[olgaburton]

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[hhandyman]

Make sure Ryan sees this article and considers not just that part of the budget but what part of the funds if not paid will affect his local voters those that might loose their jobs and will reflect on his reelect-ability out side of that direct application to the T party conservative point of view and what they value above the health of those that are unable to pay for basic life support care vs what puts food on the table for those that have no chance to get work that they are able to do with what life skills they've gotten in the current public educational service that was provided them If they could attain it.

[wayneonly]

Hell, don't tell me the Republicans are finally thinking about jobs. Oh yeah, we're talking about DEFENSE jobs. Those jobs along with the ability to MAKE WAR are Republican "sacred cows". But it is all right to cut education funding, government jobs, state funding that helps pay for fire fighters, police, state, county and city workers. But let's not cut any DEFENSE jobs, we might not be able to fight any more foreign undeclared wars. We might lose our position as the "world police".

[aldrich617]

The reallocation of funds from military procurement to infrastructure repair would give the taxpayer a lot more
bang for the job creation buck, but since the idea makes
good sense it probably won't happem.

[hillzhavays]

by actornaught June 13, 2012 3:18 PM EDT
Google is not your friend, hillzie.

"U.S. Firms Build Up Record Cash Piles"

http://online.wsj.com/article/SB10001424052748704312104575298652567988246.html

by sjc_1 June 13, 2012 5:32 PM EDT
hillz,

You are one of the most blind wrong wingers that I have come across on here in a while. You know the points I make are valid, but you keep talking about koolaide, that is so dumb and simple minded.
______________________________________________

OK, either you have ZERO reading comprehension, you are both simpleton's, you have no understanding of business or a terminal combination of all three.

Business does not have cash to spend on so-called jobs, because you can't allocate money to ends for which there is no purpose. If there is no demand for the goods, you don't spend or invest money to create the goods. Business 101.

I was going to go off on a rant but I'll just tell you actor, read paragraphs 7-12 (and also realize that the article's TWO YEARS old this month).

You both don't get it - although you seem to be dimly aware of one thing - businesses shouldn't sit on their cash. It should be used for capital improvements, expansion, marketing, R&D to maintain an edge in a competitive marketplace. That kind of thing. It does them no good to hold it - and if they're a corp, they aren't supposed to. Remember this: if a business is not growing, it's shrinking. Nothing is static in a free market.

A business sitting cash is an uncertain business. And if it's a corporation, which this article is about, then it's supposed to increase shareholder wealth - meaning it's either expanding or its distributing the extra cash to shareholders. It's job is not to sit on cash.

Businesses don't have money to spend on jobs right now, because there's no demand to drive the expansion. A business doesn't spend money (like Obama does) to create demand. It expands to meet demand. So if there's no demand, there's no money to spend on jobs, a concept lost on Keynesians, who only understand what they read in a book, nothing about the real world.

BTW, Pep Boys is mentioned in paragraph 11 - wow $80 million in cash? A novice would be impressed with that. Now, take a look at what happened recently when a buyer backed out of buying the FINANCIALLY TROUBLED auto parts retailer.

So no, actor, your article is not proof of how great US business is doing.

[wayneonly]

Hillzhavays, you are right that businesses need customers in order to have incentive to expand or start new businesses. With that in mind, where are the customers going to come from when Romney and the Republicans lay off say 200,000 to 400,000 (just a number I picked) federal employees, cut state funding resulting in more layoffs of state, county, and city employees including firefighters and police, cut education funding resulting in teachers losing jobs. This will result in an approximate loss of 400,000 to 800,000 jobs not counting the peripheral jobs lost as a result of these massive layoffs. This kind of austerity program has not worked in Europe, and it won't work in America. So let's get on with rebuilding America's crumbling infrastructure and rebuilding America's economy. Let's rebuild something instead of destroying other countries.

[hillzhavays]

The reason it hasn't worked in Europe is due to other factors, such as Nanny States already laden with other massive entitlement programs they can't afford. Happily, we aren't in that position and will be even better off when Obamacare is repealed and businesses can start hiring again.

[WHAT-IS-HE-SMOKING]

Let me see, BOTH PARTIES agreed to the across the board cuts when the BUDGET CONTROL ACT OF 2011 was passed but now they don't want to honor what they had voted for? Maybe we don't need to be ALL over the world, or maybe we make the other countries help pay more for their protection?

[sjc_1]

That is a good question. We have troops on South Korea and Japan, how much are those and other counties contributing to the costs? This does not HAVE to mean job losses here in the U.S.

[hillzhavays]

Japan and South Korea already have cost sharing agreements with the US.

[sjc_1]

President Obama tried to save fire, police and teachers jobs using ARRA recovery funds and give governors and mayors time to adjust their budgets to keep those people on the job. Many did not adjust their budgets and people lost their jobs. That was not the President's fault, he tried to help governors help their states.

With 3 million people working for the Department of Defense, I would say more than a few of them are duplication or retiring on the job. Take a look at those people as well as weapons programs.

We are in more than 100 countries with military world wide. Do we really need to be in that many places? We spend $600 billion dollars per year on defense, that is more than China, Russia and the WHOLE rest of the world combined. Do we really need to spend so much? Can't we have a strong defense without doing broke?

[hillzhavays]

by sjc_1 June 13, 2012 9:39 AM EDT

Tanks destroy, tractors produce. If you want manufacturing jobs, make something that promotes production and not destruction.
___________________________________

So you've read a book on Keynesian Economics, I see. That's a laugh - no wonder everything you post sounds like you've learned about the world in a book.

Make a 100 tractors and the Job Fairy comes along and poof! 100 jobs?

Where did I get the money to make the tractors? Oh, yeah, the government just gave them to me. Awesome! (I wouldn't be as excited to get them for free if I were a Lib, I would just feel entitled to get them)
Where did I get the money to pay the workers that are going to drive them? They cost around $500,000 a year, wait, no - they'll cost $62,000 a year with the new health law so I have to factor that in (that's an increase of $1,200,000 in labor cost, since you are apparently math-challenged - coming directly out of Gross profit - suddenly the future isn't so bright).

Where am I going to get the $6,200,000 that I'll have to pay them before I see any sales of the bread I'm going to make?
Who's going to pay property taxes on the land I use to grow my wheat?
Who's going to pay for the leases on the trucks I use to transport the wheat or bread to market?
Who's going to pay the drivers of the trucks? (don't forget about the added labor cost of expensive healthcare that's coming)
Who's going to pay for the ovens I use to bake the bread?
Who's going to pay the bakers?
Who's going to pay for the advertising I use to differentiate my bread from my competitors and drive sales?
Who's going to pay my quarterly taxes while I'm waiting for my product to make it's way through the chain of production from raw materials to final product?

No one but me. And I'll have to invest millions of dollars, and months of labor to get there. But then, you don't think there's any uncertainty in this economy, so why don't you invest millions of dollars and months of labor since the future is so certain? You're guaranteed a profit aren't you? Because in business, profits are always guaranteed. Or so a novice thinks. That's why you don't understand why businesses aren't hiring.

[sjc_1]

Blackwater made a TON of money in Iraq guarding our embassy people. Instead of Marines doing it they outsourced it to a private for profit company at TEN times the price. Now there is an efficient use of public tax payers dollars...NOT!

[hillzhavays]

There was an extra zero obviously einstein.

[mtownerman]

hmmmm....same ole' argument facing a lot of countries these days. I guess we'll rationalize it in that we need a large(r) military because this is a dangerous world..and that will spur more job creation and will be good for the economy. But wait, our gargantuan military is plenty large enough -and- aren't we supposed to be driving costs down to reduce the debt instead of the other way around..? I guess you idiots will never wake up..it's obvious you never balance your checkbook!

[sjc_1]

The Pentagon has not passed an audit in 35 years, that was the word from a Pentagon auditor interviewed on 60 Minutes years ago. They spend money that they can not account for, it just goes and they have NO idea where. That does not sound like an efficient use of tax payer's money to me.

[mgdvt]

This conjunction of an immense military establishment and a large arms industry is new in the American experience. The total influence — economic, political, even spiritual — is felt in every city, every statehouse, every office of the federal government. We recognize the imperative need for this development. Yet we must not fail to comprehend its grave implications. Our toil, resources and livelihood are all involved; so is the very structure of our society. In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist.
We must never let the weight of this combination endanger our liberties or democratic processes. We should take nothing for granted. Only an alert and knowledgeable citizenry can compel the proper meshing of the huge industrial and military machinery of defense with our peaceful methods and goals so that security and liberty may prosper together. President of the United States, former General of the Army, January 17, 1961