Defense cuts would ‘pummel’ state’s economy, group says


By:  Patrick Danner The Houston Chronicle December 27, 2012

A new study by a group that seeks to preserve a robust military industrial base calculates that looming budget cuts to the Department of Defense will cost Texas 111,640 jobs and $6.1 billion in economic output through 2017.   The cuts also will lead to $1.8 billion in lower personal earnings for defense-related jobs in Texas, the Southwest Defense Alliance projects.   “It’s clear to me that these defense cuts will pummel Texas’ economy,” said retired Army Major Gen. Dennis Kenneally, the alliance’s executive director.   However, the expected impact of automatic cuts known as sequestration won’t be as bad in Texas as Defense Department personnel reductions, or drawdowns, in the state since 2009.   The alliance estimates Texas has lost 135,428 jobs and $7.1 billion in economic output since 2009 from military drawdowns. Total earnings related to those jobs fell an estimated $2.2 billion over the last three years.   ‘Catastrophic effect’ Combined, drawdowns and sequestration would account for the loss of 247,000 Defense Department and civilian-defense jobs and $13.1 billion in economic output in the state from 2009 to 2017, the alliance reported.   “Texas cannot afford to lose one more job, let alone 247,000,” Kenneally said. “These are well-paying jobs that have an economic multiplier effect that cascades throughout the Texas economy and has potentially a catastrophic effect on the defense infrastructure in the state, which is fundamental to the … defense of this nation.”   The nonprofit’s study highlighted only statewide estimates.   San Antonio is home to Joint Base San Antonio, the largest joint base in the Defense Department. It includes Lackland AFB, Randolph AFB and Fort Sam Houston. The city also has the military’s only level-1 trauma center,San Antonio Military Medical Center.   Elsewhere in Texas, major military facilities include Fort Hood, Fort Bliss in El Paso and Laughlin AFB in Del Rio.   Despite the alliance’s projections, Robert Murdock, head of the city’s Office of Military Affairs, said San Antonio is well-positioned to deal with sequestration because of the critical missions in the area.   “We were such a significant growth community as a result of the ’05 BRAC (Base Realignment and Closure Commission),” Murdock said. “We have experienced significant growth – my gosh, $3 billion plus in construction as a result.”   “I don’t think we are near as vulnerable as, say, some other communities,” he added.   Cuts may start Tuesday The Southwest Defense Alliance is a nonprofit group represented by retired military officers, executives of defense-contracting firms and former government officials. Former California Gov. Pete Wilson is its honorary chair.   Without a deficit-reduction deal between Congress and President Barack Obama, automatic spending cuts are to take effect starting Tuesday. Sequestration calls for $1.2 trillion in spending cuts through 2021. About $492 billion is expected to come from military spending. That doesn’t include $487 billion already set to be cut from the defense budget over the next decade.   The defense alliance used a model to project the impact of the cuts on a proportional basis in six states. Besides Texas, it looked at Arizona, California, Nevada, New Mexico and Utah.   Keith Phillips, senior economic policy adviser for the Federal Reserve Bank of Dallas‘ San Antonio branch, said he believes the city can withstand military jobs cuts given the growth in the civilian labor force. It has added more than 300,000 nonfarm jobs in the first 11 months of the year.