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Impending defense cuts: states like Texas stand to be big losers

In an era of more austere defense spending, all states are not equal.

With the specter of automatic defense cuts hanging over the supercommittee's deliberations, states that have benefited from the burst of post-Sept. 11 spending stand to be big losers. 

In states like Texas, which are home to both big military bases and large defense manufacturing sectors, austerity will be hard to get used to, given the brisk growth in defense spending in the Bush era. The average annual growth rate in defense discretionary spending from 2000 to 2009 was 9 percent, according to the Congressional Budget Office.

In a speech Wednesday at the conservative think tank the Hudson Institute, Texas Sen. John Cornyn, a member of the Armed Services Committee, made the case against the automatic spending cuts -- “sequestration,” in Washington jargon -- that would chop as much as $55 billion out of defense spending in fiscal year 2013 and about $500 billion over ten years, if the Joint Select Committee on Deficit Reduction cannot come up with a plan to reduce future deficits. (The so-called supercommittee is up against a Nov. 23 deadline to report its recommendations.)

Defense spending would be hurt, but only if Congress allows the cuts to occur.

“I think there would be a furious effort to overturn those” automatic defense cuts, Cornyn said after his speech. He mentioned other GOP senators, Armed Services ranking member John McCain, Jon Kyl of Arizona, and Lindsey Graham of South Carolina, as vowing to rescind the automatic defense cuts.

Cornyn said, “I’m going to be all in” in their effort. “My hope is we don’t come to that” -- in other words, he hopes the super committee does devise a plan that spares defense and gets its savings from tax reform and reductions in future entitlement spending.

You can see why Texans such as Cornyn might have cause to worry.

Texas ranks first among the 50 states in Defense Department payroll ($19.8 billion in Fiscal Year 2010), third in Defense Department contracts (more than $30 billion in FY2010) and third in total defense Department spending ($54 billion in FY2010).

Lockheed Martin employs about 20,000 workers in the Lone Star State, but Texas is also home to dozens of smaller firms with defense contracts: Elcan Optical Technologies and Optex in Richardson, Texas; Aviall Services in Dallas, and many others. All of these firms could struggle in the new austerity.

“When I think about national security, I try not to be too parochial about it, but recognizing that it does have an impact on our state. We always like to brag that one out of every ten persons in uniform calls Texas home,” Cornyn said.

For instance, there are some 60,000 military and civilian personnel at Fort Hood in Texas, and the base costs more than $6 billion a year.

Cornyn said the automatic defense cuts -- combined with other cuts already mandated by the Budget Control Act and others put in motion by former Defense Secretary Robert Gates -– “could not help but have a dramatic negative impact on not only military personnel and preparedness, but on our state.”

In a visible reminder of the robust Pentagon budgets of the Bush era, in the audience for Cornyn’s speech Wednesday were two Bush administration veterans and architects of the Iraq invasion: Hudson Institute Senior Vice President Lewis “Scooter” Libby and former Defense Department official Doug Feith, now a senior fellow at Hudson.

“This should really be a time for rebuilding and retraining, and not retreating – but retreat is the only way to describe what would happen if our military forces are required to live under this sequestration process,” Cornyn said.

For example, the Army currently has 100 maneuver battalions, Cornyn said,  but the current round of defense cuts, with sequester cuts added, could shrink that to 60 battalions. The Navy fleet could drop from 288 ships to 238, he said.

“Our military leadership is trained not to panic, but you can hear their frustration and you can hear grave concern in their voices….” Cornyn said. “They’re frustrated that under the sequestration process the cuts would be arbitrary and reckless because they would not reflect any strategic assessment of what military capabilities America really needs but only how much money is available.”

Underscoring Cornyn’s argument, Lockheed Martin spokesman Chris Williams said, “While we understand the difficult task for Congress and the special deficit committee as they develop a set of recommendations that address our nation's fiscal challenges, further cuts beyond the already mandated reductions put critical national security capabilities at risk.”

In his speech Cornyn cited growing threats from China such as its “carrier killer” ballistic missile that could destroy U.S. aircraft carriers. “China still has hundreds of millions of people living in poverty, yet they are making huge investments to upgrade their military forces.”