Stanton: Defense cuts could be ‘devastating’ to region’s economy

Jun 5, 2012, 6:56 AM | Updated: 7:17 am

WASHINGTON — Phoenix Mayor Greg Stanton met with politicians and aerospace industry executives in Washington on Monday to discuss the impact that automatic defense budget cuts could have on jobs in Phoenix and around the country.

Stanton acknowledged that while defense cuts will happen, the “massive, across-the-board, haphazard cuts” called for under the budget sequestration process would have a “devastating impact on the local economy.”

“One of the greatest looming threats to our local economy was the so-called sequester cuts,” said Stanton, who heads a U.S. Conference of Mayors defense transition task force.

What Stanton calls the “haphazard and draconian” sequestration cuts were set in motion last fall when Congress failed to agree on $1.2 trillion in long-term budget reductions.

As part of a deal that let the government raise the debt ceiling, lawmakers were required to find reductions or have them made automatically in the 2013 budget, with half of the cuts coming from defense and half from domestic programs.

Arizona is one of the top five states in the country in defense contracts, and top 10 states in aerospace contracts, Stanton said.

He said contractors have told him that cuts envisioned in the sequestration could result in the loss of thousands of jobs in Arizona.

“And again these are the highest-wage jobs in one of our core industries, the aerospace industry,” Stanton said.

Stanton said the mere threat of sequestration is already causing problems in the defense industry, as capital-market investors are staying on the sidelines when it comes to aerospace and defense.

“The impact of the sequester isn’t going to wait to January 2013 when these automatic cuts kick in. It’s being felt by people now,” he said.

The White House and members of Congress agree with Stanton that sequestration is the wrong way to cut federal spending, but they have yet to find a way on their own to balance the budget.

The White House Office of Management and Budget said in a prepared statement Monday that “the sequester is, by design, bad policy. Congress should do its job and pass a balanced plan for deficit reduction.”

Sen. John McCain, R-Ariz., who was scheduled to meet Monday with Stanton, has said that “sequestration would undermine the readiness of the armed services … not to mention the shattering impact on our fragile economy with the potential for hundreds of thousands of layoffs.”

He supports the 2013 National Defense Authorization Act, passed last month by the Senate Armed Services Committee, that would make targeted defense reductions.

Stanton said McCain has agreed to make Armed Services Committee experts available to his Conference of Mayors’ task force. The task force will work with cities around the country on transition issues that they will likely face as the country moves out of combat roles in Iraq and Afghanistan, among other reductions.

Mesa Mayor Scott Smith, a second vice president of the mayor’s conference who worked with Stanton setting up the task force, agreed that sequestration is the worst way to make cuts to the defense budget.

“There is no doubt that there are businesses in Arizona that will be hugely impacted by haphazard reductions in defense spending,” Smith said.

Both Stanton and Smith hope to encourage the members of Congress to work through any differences and come to an agreement that does not leave the budget cutting decision in the hands of the Treasury.

“When you take that approach [sequestration cuts] you’re cutting meat along with the fat,” Smith said.

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Stanton: Defense cuts could be ‘devastating’ to region’s economy