Defense spending in middle of ‘sequestration’

contributing writerJuly 22, 2012 

For a $5 word, “sequestration” is putting in a lot of overtime to earn its pay these days. In the energy field it refers to schemes to pump carbon emissions from burning coal into the ground instead of the atmosphere.

In the world of federal getting and spending, however, it means an automatic reduction of spending when Congress won’t do its job.

Which, of course, would seem to be a perpetual condition, but in this case sequestration was the too-clever-by-half, this’ll-really-show-us way of “resolving” last year’s fight over raising the federal debt ceiling.

The Budget Control Act of 2011 contains a provision for automatic spending cuts to numerous federal programs (although sometimes described as “across the board,” certain spending such as civilian and military pay and Social Security are exempt) starting in January.

When sequestration was enacted, 2013 must have seemed like a long way off, and perhaps some thought that a rebounding economy would bail Congress out of the consequences of making a decision or someone would come up with an even more brilliant plan to either resolve the issue or send the can scuttling even farther down the road.

But 2013 is now less than six months away, the economy didn’t recover, no one came up with a great alternative (and isn’t likely to in an election year) and the can isn’t moving.

That sets up the potential for some huge and bitter fights, starting with one of considerable interest in Washington – defense spending.

It is already creating some interesting political divides and alliances, uniting advocates of defense spending with those who aren’t interested in defense but who love buying the electorate’s votes with the voters’ money, pitted against those who hate defense spending to start with and those who hate federal spending of most types as well as deficits and huge debt.

Sequestration will generate some lovely fights over the impacts. The Center for Security Policy, a pro-defense spending group, culled numbers on appropriations to defense prime contractors by state, applied an 18 percent spending cut (which includes the impact of sequestration) and came up with revenue loss of more than $1.3 billion a year in Washington, on a 2011 base of $7.2 billion.

Maybe it’ll be that much. Maybe it’ll be much worse, or not nearly as severe, depending on which specific programs performed by which specific contractors in which specific locales are targeted, and whether they’re trimmed or axed entirely.

Those hold true for military installations as well. Washington has a lot of them, and historically has fared well when it comes to maintaining its portfolio. Across-the board cuts could hit us hard, or spare us. It’s all in the application.

That much should have been obvious to those who approved sequestration a year ago but who can now be counted on to decry such a draconian, unfocused approach, using a shovel instead of a scalpel on the federal budget. In this case, though, it was Congress itself that chose the shovel – and is hitting itself in the face with it, along with anything else – like defense contractors, military installations, workers, taxpayers, communities, states – unfortunate enough to be within the unpredictable arc of its swing.

 • In attempting to make a pop-culture reference about wines, your columnist managed to misspell Mateus in last week’s column about recommended business books. Those of a certain age will remember Mateus as a hugely popular choice if the extent of your wine knowledge was that you didn’t want to be seen drinking Boone’s Farm or Annie Green Springs. Mike Veseth, the University of Puget Sound wine economist and author of “Wine Wars,” calls Mateus “the upscale popular wine of its day. I always mention it in my talks and I get lots of knowing looks when I do.”

Bill Virgin is editor and publisher of Washington Manufacturing Alert and Pacific Northwest Rail News. He can be reached at bill.virgin@yahoo.com.

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