Defense contractor Brian Kent doesn’t like the sound he hears from Washington about the automatic budget cuts known as sequestration.
It’s the sound of a lot of talk and little action, and Kent says it’s hurting his business and others headquartered outside the gates of Fort Bragg in Fayetteville, N.C.
“We took cuts across the company, not just at Fort Bragg,” said Kent, president of K3 Enterprises, which provides technological services. “Yes, we cut staff. It was almost a joke in Washington, D.C. ‘Federal leadership – there is no decision too important we can’t put off until tomorrow.’”
The sequester was never supposed happen. White House and congressional lawmakers embraced it during the 2011 debt ceiling showdown as a political poison pill that would force both sides to develop a better way to ease deficits by cutting spending or raising taxes. They couldn’t agree on an alternative, and now $52 billion more in military cuts loom in the new fiscal year that starts Tuesday – on top of the $37 billion slashed earlier this year. Combined, they’re leaving residents and businesses near some of the nation’s military installations warning about the adverse effect the cuts will have on regions dependent on the military.
“There has been a lot of concern raised, particularly about the furloughs of civilian employees,” former Defense Secretary Leon Panetta told McClatchy. “When you look at these super bases around the country, a good portion of the local economies are dependent on them. It’s impacting our economy, it’s impacting jobs and it’s impacting our readiness.”
A provision of the 2011 Budget Control Act, sequestration is set to cut $500 billion from the defense budget over a decade, and with additional reductions implemented in 2011, nearly $1 trillion would be cut from projected military spending over the next 10 years.
Pentagon budgeters were able to blunt the impact of the initial cut after Congress approved a request in June that gave the Defense Department flexibility to shift funds across accounts. That ability, and what Defense Secretary Chuck Hagel called additional “budget management efforts,” allowed the Pentagon to whittle the civilian employee furlough days from 21 to six.
Still, the cuts were felt in military towns and are about to grow.
“It’s the most disappointed I’ve ever been as a member of Congress,” said Sen. Lindsey Graham, R-S.C., whose state is home to eight military installations. “I’m disappointed in my party for even embracing the concept of sequestration if we failed to achieve $1.2 trillion in cuts. I’m disappointed in the commander in chief above all.”
Though he’s more concerned with sequester’s effect on military preparedness, Graham conceded that its economic impact “will be substantial in those areas of the country that depend on the military footprint.”
“Communities that depend on that footprint are going to be economically devastated – it would be like major industries closing,” he said. “That’s the side effect of sequestration that no one thought much about.”
John Crutchfield, president of the Greater Killeen Chamber of Commerce, likes to call the Army’s Fort Hood base the “800-pound economic gorilla” in Central Texas responsible for nearly 69,000 jobs and $25.3 billion economic impact for the state, according to a 2011 report by the state comptroller’s office. “We like to protect that gorilla,” Crutchfield said.
In South Carolina, Dan Mann, executive director of the Columbia Metropolitan Airport, is watching to determine how Round Two will impact Fort Jackson, the Army’s massive basic training facility in Columbia.
A sequester-related Pentagon review ordered by Hagel last month said mandated spending cuts could force the Army to trim its personnel ranks from 535,000 to 380,000 – a worst-case scenario that makes Mann cringe.
About 250,000 of the 1 million passengers who fly into Columbia are linked to Fort Jackson and the military. A significant drop in Army trainees flying in and out of Columbia could prompt airlines to cut back service, which could adversely impact business, vacation and student travel into South Carolina’s capital city, Mann said.
Reduced passenger traffic would also hamper the Columbia airport’s effort to lure a low-cost airline to its gates and make it more difficult to compete with nearby airports – the Greenville-Spartanburg International Airport, the Charleston International Airport and North Carolina’s Charlotte-Douglas International Airport. All are served by budget carriers such as Southwest Airlines and JetBlue.
“The reality is traffic is revenue, and if it goes down, the airlines start cutting traffic,” Mann said. “It all snowballs. Right now, we’re projecting zero growth at the airport. If there’s a decline in service, we’ll delay some capital projects.”
In Fayetteville, N.C., where military spending and investment around Fort Bragg accounts for 37.7 percent of the area’s gross domestic product, business leaders thought they were prepared for the sequester’s impact.
“The thing that got us is that we weren’t prepared for the furloughs,” said Brandon Plotnick, marketing director for the Fayetteville Region Chamber of Commerce. “Furloughs were a major hit. We have 8,500 civilian employees. We were looking at $47 million, $48 million in direct salary impact.”
To ease the pain, chamber leaders urged local businesses to extend military discounts to Defense Department civilian employees. Defense contractor Kent said his business struggled because of sequester-related confusion over contracts.
“We have won contracts this year only to be on hold because of money realignment or the government wanting to readjust the plan before starting,” Kent said in an email interview. “It is just come in and adjust as best you can. I know it has put some small businesses out of business. I know that the banks are starting to change their policies and making shorter-term credit.”
Kent recalled chatting with lawmakers in Washington and North Carolina recently and scratching his head afterward.
“I just asked, ‘Where are the cuts coming to so we can in the commercial/military industry base start to plan and try to weather the storm,’” he said. “Of course, they had no answer to that, neither Democrats nor Republicans. The military had so many plans working even they were tired of rewriting them.”