AIA Analysis: U.S. Defense Cuts Could Eliminate One Million Jobs

 - October 28, 2011, 10:33 AM
Marion C. Blakey, president and CEO of the Aerospace Industries Association, says “sobriety” is needed in the debate over U.S. defense cuts. (Photo: AIA)

An economic impact analysis commissioned by the Aerospace Industries Association (AIA) predicts that more than one million jobs will be lost in the aerospace and defense industry, if the U.S. Congress fails to reach an agreement that would prevent automatic government spending cuts.

The analysis by George Mason University professor Stephen Fuller and Economic Modeling Specialists is based on a scenario in which $1 trillion is cut from government defense spending over the next 10 years–some $465 billion in already planned reductions and $500 billion more through “sequestration,” or the automatic cuts required under debt-limit legislation Congress passed in August. Automatic cuts will be prevented, if the bipartisan Joint Select Committee on Deficit Reduction agrees on reducing the overall government deficit by $1.5 trillion by November 23. The committee reportedly is making poor progress toward reaching consensus.

In an October 25 briefing in Washington, D.C., Fuller said his analysis assumes a reduction of $45 billion in government spending on military equipment (exclusive of personnel and research and development) in Fiscal Year 2013, the first year that automatic cuts would take effect. His figure includes $19 billion in planned reductions and $26 billion more through sequestration.

The steep decline in sales revenue would result in 1,006,315 overall job losses, according to Fuller’s analysis, including 352,745 jobs supported directly or indirectly by defense contractors, their suppliers and service businesses that support the industry, and 653,570 other jobs affected by reduced payroll spending across the economy. The total job loss would add 0.6 percent to the nation’s current 9.1 percent unemployment rate, an issue expected to dominate the 2012 presidential election.

“These projections are based on solid data and analysis, and they should bring some sobriety to the debate” over defense cuts, said AIA president and CEO Marion Blakey. “We need to reinvigorate our country while keeping our country safe in a world that’s populated by asymmetric threats, terrorism and rogue states.”

Fuller also presented his findings in testimony before the House Armed Services Committee on October 26. The committee has produced its own assessment of defense cuts and identfied several “at risk” modernization programs. These include Apache and Kiowa Warrior helicopter upgrades by the Army, the Navy’s F-18E/F Super Hornet and the Air Force’s KC-46A aerial refueling tanker and Next Generation Bomber. The Marine Corps faces “likely elimination” of the F-35B Joint Strike Fighter short-takeoff/vertical landing variant.