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How will the 2013 Defense Budget Cuts Affect America’s Economy?

Washington DC February 23, 2012: Last week the House and Senate Armed Services Committees held hearings to investigate the serious security and economic impacts of proposed defense budget cuts. Testifying at the House Armed Services Committee hearing on February 17, Secretary of the Army John McHugh stated: “To use an axe to cut a half-trillion dollars from defense spending would be perilous enough, but to do so without providing the department with any means of managing those reductions would be beyond risky.”

To assist community leaders and citizens in managing the local economic impact on businesses and jobs from these reductions in the defense budget, the Center for Security Policy has published an online help center with over 29,000 detailed reports for cities, counties, congressional districts and states at www.forthecommondefense.org.  These Defense Breakdown Economic Impact Reports will be updated monthly with new data and specific program cut impacts, as Congress debates the proposed 2013 budget.

The Defense Breakdown Economic Impact reports have received media coverage in industry and national publications, as well as local stories in radio, television and print  in Ohio, Arkansas, Colorado, Washington DC and many other states.  To view local and national press coverage about the Defense Breakdown reports, click here.
Summary Reports (2 pages each) for both the national and state levels can be downloaded here. Highlights from the national report are below.  A non-technical FAQ explaining data sources, methodology and future plans for the Defense Breakdown can be read here.  To compare the national average estimate in the Defense Breakdown Economic Impact Report for your community, to the proposed 2013 budget, visit the Department of Defense Office of the Comptroller website.

The Defense Breakdown Detailed Reportsfound here – are estimates that show the potential state-wide economic impact of defense budget cuts on cities, counties, congressional districts, minority-owned businesses, veteran-owned businesses, and other small business categories, organized with over 2,700 “Contractor Location” reports.  An additional set of over 26,000 reports shows estimated impacts from defense spending cuts at the “Place of Performance” – a closer measure for potential job losses – for cities, counties and states, with three separate reports for each location: spending by weapon system, by government contracting office, and by products and services.

Frank J. Gaffney Jr., President of the Center, stated:

“A weaker national defense threatens the security of the United States and its allies.  Furthermore, to the extent that those in favor of cutting the defense budget argue that such cuts are necessary to strengthen the economy, this report shows the opposite to be true.  Drastic cuts to defense of 9% – and under the “Sequestration” cuts required for 2013, at least 18% – will cause irreversible damage to America’s industrial base and R&D capabilities.”

“Local employers, citizens and communities will bear the brunt of these cuts.  The Defense Breakdown Economic Impact Reports will allow them to prepare for this impact and to enlist their elected officials in mitigating it.”

Highlights from the National Summary Report:

National businesses will not escape the 9% and 18% cuts

  • Public data for 2010 shows American businesses earned over $344 billion supporting America’s defense.
  • But under these 10-year defense cuts of at least 9%, American annual business losses could be greater than $30 billion. American businesses may have to fire workers.
  • And at the “Sequestration” level of at least 18% in defense cuts, American annual business losses could be greater than $61 billion.  Some American businesses may have to shut down.

 

    American Businesses Projected Revenue Reductions Based On National Average


    Type of Business
    Numbers of This Business Type 2000-2010
    Revenue for This Business Type 2010
    Revenue Losses for Business Type 2010 – at Least 9% Reduction
    Revenue Losses for Business Type 2010 – at Least 18% Reduction
    Minority Owned
    27,891
    $8,092,313,343
    -$728,308,232
    -$1,456,616,461
    Small Businesses
    37,404
    $27,577,729,134
    -$2,481,995,722
    -$4,963,991,440
    Small Disadvantaged
    36,210
    $9,972,058,230
    -$892,485,281
    -$1,794,970,551
    Veteran-Owned
    39,669
    $9,087,167,330
    -$817,845,091
    -$1,635,690,183
    Service-Disabled Veteran
    25,366
    $9,318,569,628
    -$838,671,301
    -$1,677,347,600
    Black American
    13,503
    $6,033,714,029
    -$543,034,286
    -$1,086,068,570
    Hispanic American
    19,377
    $9,094,000,704
    -$818,460,093
    -$1,636,920,194
    Asian-Pacific Owned
    20,205
    $7,613,211,567
    -$685,189,065
    -$1,370,378,134
    Women-Owned
    70,248
    $12,660,015,360
    -$1,139,401,429
    -$2,278,802,857

    The Center’s “Defense Breakdown Economic Impact Reports” are part of a broader 2012 initiative, the Coalition for the Common Defense, to educate and engage the American public on the importance of maintaining a strong national defense.

    About the Coalition for the Common Defense

    The Coalition for the Common Defense is an alliance of like-minded individuals and organizations who believe that without provision for the “common defense,” as articulated by the Founders, the freedom that has allowed unprecedented opportunity and prosperity to flourish in this country would soon be imperiled. In this new age of budgetary cuts, the Coalition rejects the false choice between military strength and economic health contending that economic prosperity depends on a strong national defense. Through a series of events and strategic partnerships, the coalition is calling on elected officials, candidates for office and others who share our commitment to the common defense to uphold these principles.  We must return the United States to sensible fiscal principles without sacrificing our national security.

    A full statement of principles can be located here. The Coalition of the Common Defense can be found online at www.forthecommondefense.org.

    About the Center for Security Policy

    The Center for Security Policy is a non-profit, non-partisan national security organization that specializes in identifying policies, actions, and resource needs that are vital to American security and then ensures that such issues are the subject of both focused, principled examination and effective action by recognized policy experts, appropriate officials, opinion leaders, and the general public.

    For more information visit www.centerforsecuritypolicy.org.

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