Glenn Hamer
In August of last year, following a bitter fight in Washington over whether to lift the federal debt ceiling in order to prevent the United States from defaulting on its debt, Congress passed and the president signed into law the Budget Control Act of 2011.
That law created the bipartisan Joint Select Committee on Deficit Reduction, otherwise known as the Supercommittee. Arizona’s own Sen. Jon Kyl was joined by 11 other members from the House and Senate charged with designing a framework for how to reduce the federal deficit by at least $1.5 trillion over a 10-year period that would then receive an up or down vote from Congress. All options were on the table, ranging from spending cuts to tax hikes to reforms to entitlement programs like Medicare and Medicaid.
Time was short, as the committee only had until Nov. 23 to issue its recommendations. Failure to deliver meant that $1.2 trillion in automatic reductions in government spending would kick in.
It didn’t work. Despite the nearly round-the-clock work by committee members and staff, the committee could not deliver a deficit reduction plan. And with the one-year anniversary of the Supercommittee’s establishment fast approaching, Congress and the president have still been unable to reach some sort of agreement over deficit reduction.
All of this leads us to today, where those automatic spending cuts set for January 2, 2013 and their potentially devastating consequences are looming large.
The formal name for these automatic cuts is called sequestration, a budgetary tool – an axe, specifically – in the Gramm-Rudman-Hollings Deficit Reduction Act of 1985. By this process, money to be doled to government agencies based on congressional appropriations is “sequestered” by the Treasury.
These are across-the-board cuts, affecting everything from the Department of Defense to subsidized school lunch programs.
Those defense cuts stand to deliver a big blow to a struggling national economy and especially here in Arizona, a top-10 state in terms of military contracts and where 35,000 Arizona workers are directly employed in the defense and aerospace industry.
A new report by the Center for Security Policy estimates that Arizona is facing cuts ranging from $1.1 billion to $2.1 billion. Sen. Kyl has called attention to a Congressional Budget Office report that says sequestration could negatively affect the nation’s economy by as much as 3.9 percent.
And while some assume that a post-election lame duck session of Congress will be able to right the ship before January, Arizona defense contractors and others around the country could be feeling the effects of sequestration very soon. As pointed out by Scott Lilly and Jim Dyer in a recent Washington Post column, employers faced with losing federal contracts could start issuing layoff notices as soon as August or September.
Is this the kind of news members of Congress want to face on the campaign trail? After all, isn’t defending our nation from outside threats a constitutionally mandated responsibility of the federal government?
Sen. John McCain has joined Sen. Kyl in sounding the alarm over the devastation that could be borne by our nation’s defenses if sequestration occurs. Sen. McCain has introduced legislation that would direct the Secretary of Defense to provide to Congress a detailed report by August 15, 2012 on the specific impacts on national security if an additional nearly $500 billion in automatic budget cuts are imposed upon the Department of Defense.
The language was adopted by all the members – Republican and Democrat – of the Senate Armed Services Committee as part of the fiscal year 2013 National Defense Authorization Act, and the language was filed as an amendment to the Farm Bill currently under debate.
As Sen. McCain rightly says, “These cuts would ripple through our fragile economy by eliminating hundreds of thousands of jobs in the defense industry, hitting countless communities around our nation that are already struggling in these tough economic times.”
Our leaders closer to home are watching. Gov. Jan Brewer, who recognizes the defense industry’s profound effect on our economy, said, “It’s critical that our nation get a handle on its budget deficit, but these arbitrary, across-the-board cuts would do real damage to vital defense and other programs, not to mention our fragile economy. I urge Congress to take action so that the deficit can be reduced responsibly rather than with drastic cuts that will do more harm than good.”
And Phoenix Mayor Greg Stanton is working closely with Sen. McCain in this area, leading a U.S. Conference of Mayors task force that is assessing how cities around the country will be affected by these cuts.
Sen. McCain is right when he says, “We cannot wait until a ‘lame duck’ session to deal with this looming disaster. We must begin to negotiate a solution to the problem now.”
Potential solutions for finding our way out of the budget morass haven’t exactly been kept a secret. Bipartisan frameworks like the Bowles-Simpson National Commission on Fiscal Responsibility have presented lawmakers and the president various options for curbing spending without inflicting irreparable economic harm. We’re long ideas, but short on political courage.
Secretary of Defense Leon Panetta has compared sequestration to “shooting ourselves in the head.” By acting sooner rather than later, Congress and the president can avoid this very preventable injury to the nation’s economy.
Glenn Hamer is the president and CEO of the Arizona Chamber of Commerce & Industry
