Posted on Jul 7, 2015
"The biggest and most disruptive layoffs in America are coming from the military"
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From: The Washington Post
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The Iraq war was good for the economy of Jefferson County, N.Y. Perhaps too good.
“We had to grow, and grow quickly,” says Carl McLaughlin, executive director of the Fort Drum Regional Liaison Organization, which supports the military base that has been there since the mid-1980s. "Because the community wants to keep Fort Drum here, and it wants to show we’re very supportive, it did a lot of things that were over the top."
As troops poured into the Army base at Fort Drum, the rural area developed at a breakneck pace. With help from state tax breaks, developers built 3,800 units of brand-new housing and 600 hotel rooms. Troops depended on the local hospital system, which received $100 million in upgrades. The school system took on thousands more students. In an area where the last big industry — paper mills — had disappeared decades ago, the infusion of people and cash was welcome.
Now, however, the citizens of Jefferson County are bracing for a collapse. In the next few weeks, the Army is expected to announce 40,000 troop cuts to comply with Congressional budget mandates, along with many thousands more pink slips for civilian support staff. At Fort Drum, estimates suggest that 16,000 of 19,000 could leave the base, as a worst-case outcome. Counting spouses and kids, about 40,000 people — a third of the county’s population — would vanish, unless they found other employment nearby.
“We’re on pins and needles,” McLaughlin says. “To not create a Detroit-like scenario, we cannot lose soldiers. We’ll feel every soldier we lose.”
That feeling is manifest at the nation’s 30 largest military installations— all of which are steeling themselves for an economic punch in the gut, as the Defense Department works through its biggest drawdown since the aftermath of the Cold War.
And this time, the pain is exacerbated by politicians.
With permission from Congress, the Defense Department has gone through a Base Realignment and Closure (BRAC) process five times since 1988, helping it more efficiently allocate forces after periods of rapid change. Over the past few years, while budgeting for troop levels to decline from a wartime high of 570,000 in 2012 to 450,000 by the end of fiscal year 2017 — and possibly 420,000 if budget caps aren’t lifted — lawmakers have been reluctant to grant the military’s request for the ability to close bases.
Instead, they will stay in operation, costing billions a year to maintain (and without the possibility of being sold off for re-use, which might give the county a chance to bring in other business). Ultimately, less funding remains for personnel at the places where they’re actually needed.
“They may say, we’re going to take 10,000 people from this base, but we can’t close the base,” said Tim Ford, chief executive of the Association of Defense Communities, which advocates for the people who live around military bases. "You keep the base there, but you hollow out the mission. So you have a big hole in your community."
So far, the Army has almost gotten down to 490,000, largely through reducing its presence overseas, and shrinking the number of free-floating soldiers who aren’t assigned a base. The next 40,000, however, will largely come from people stationed at installations.
In Fort Drum’s case, the base could end up with a skeleton crew to keep the lights on. With a BRAC round, it could be used for some other purpose. Legislators still fear base closures in their states and districts. They’re also skeptical that the reductions will save much money: The last one, in 2005, focused on strategic goals rather than budget cutting and ended up costing $35 billion to implement.
“Congress will not go along with a BRAC round until they conclude that the alternative is worse,” says John Conger, the acting undersecretary of defense for installations and environment, at a conference in late June. The upcoming wave of hollowed-out bases, Conger thinks, will make his point the hard way. "It’s going to make it clear that this dynamic is more painful than the BRAC round."
Some installations might even benefit from a BRAC round, like Fort Benning in Georgia, a large base that could pick up extra troops if the Army is allowed to consolidate. But if the budget caps set by sequestration aren’t lifted, negative impacts could be more widespread. That’s why even Fort Benning, fearful of losing the units it has, is waging a campaign to avert the worst.
“Our whole focus is to go and attack sequestration and make it so blindingly obvious that nobody can stand it,” says Gary Jones, executive vice president for military affairs at the Columbus, Ga., Chamber of Commerce.
To that end, they’re placing billboards and encouraging people to write their legislators through a dedicated Web site, GrowBenning.com. And in what’s become standard practice for military communities fearing cuts, they’ve retained lobbyists — Columbus chose the Spectrum Group, which has picked up a bunch of retired high-ranking military officers recently to take drawdown-related work.
“We are fighting a strategic battle,” Jones said. “And the strategic battle is fought in the halls of Washington. So we need to make sure to make sure elected leadership has all the support they need.” For conservative Georgia, that means giving legislators the political cover they need to vote for higher budgets, despite a tea party base that opposes politicians for doing so.
When cuts do happen, the Army offers some assistance to communities through the Office of Economic Adjustment, which had $46 million available this year to help them pivot toward other industries.
Defense-oriented Northern Virginia, for example, has received money to help contractors hit by shrinking procurement dollars, or discharged military personnel who want to start their own businesses. Now, they can walk into an office and get free advice on alternative strategies like selling services to other countries instead of just the U.S. military.
It’s the kind of thing that should probably happen before defense spending starts to dry up, but doesn’t.
“People realized how dependent we were on DoD,” says Stephanie Landrum, president of the Alexandria Economic Development Partnership, which is administering some of the adjustment funds. “But I don’t think anybody was preaching diversification.”
That kind of assistance could also help places like the area around Fort Benning, which has other big economic drivers, like an auto plant that employs 12,000 people. If those businesses can be educated on the benefits of hiring veterans, people from the base might be persuaded to stick around.
Still, those funds aren’t enough to save places where little exists to take up the slack. Jefferson County, for example, has no other industrial anchors. So even if the Army keeps the base for future use, it’s unclear where else the people who depend on it will go to find work.
“They might try to mothball it,” McLaughlin says. “The problem is, you can’t mothball the community. That’s the issue.”
http://www.washingtonpost.com/blogs/wonkblog/wp/2015/07/07/the-biggest-and-most-disruptive-layoffs-in-america-are-coming-from-the-military/
--
The Iraq war was good for the economy of Jefferson County, N.Y. Perhaps too good.
“We had to grow, and grow quickly,” says Carl McLaughlin, executive director of the Fort Drum Regional Liaison Organization, which supports the military base that has been there since the mid-1980s. "Because the community wants to keep Fort Drum here, and it wants to show we’re very supportive, it did a lot of things that were over the top."
As troops poured into the Army base at Fort Drum, the rural area developed at a breakneck pace. With help from state tax breaks, developers built 3,800 units of brand-new housing and 600 hotel rooms. Troops depended on the local hospital system, which received $100 million in upgrades. The school system took on thousands more students. In an area where the last big industry — paper mills — had disappeared decades ago, the infusion of people and cash was welcome.
Now, however, the citizens of Jefferson County are bracing for a collapse. In the next few weeks, the Army is expected to announce 40,000 troop cuts to comply with Congressional budget mandates, along with many thousands more pink slips for civilian support staff. At Fort Drum, estimates suggest that 16,000 of 19,000 could leave the base, as a worst-case outcome. Counting spouses and kids, about 40,000 people — a third of the county’s population — would vanish, unless they found other employment nearby.
“We’re on pins and needles,” McLaughlin says. “To not create a Detroit-like scenario, we cannot lose soldiers. We’ll feel every soldier we lose.”
That feeling is manifest at the nation’s 30 largest military installations— all of which are steeling themselves for an economic punch in the gut, as the Defense Department works through its biggest drawdown since the aftermath of the Cold War.
And this time, the pain is exacerbated by politicians.
With permission from Congress, the Defense Department has gone through a Base Realignment and Closure (BRAC) process five times since 1988, helping it more efficiently allocate forces after periods of rapid change. Over the past few years, while budgeting for troop levels to decline from a wartime high of 570,000 in 2012 to 450,000 by the end of fiscal year 2017 — and possibly 420,000 if budget caps aren’t lifted — lawmakers have been reluctant to grant the military’s request for the ability to close bases.
Instead, they will stay in operation, costing billions a year to maintain (and without the possibility of being sold off for re-use, which might give the county a chance to bring in other business). Ultimately, less funding remains for personnel at the places where they’re actually needed.
“They may say, we’re going to take 10,000 people from this base, but we can’t close the base,” said Tim Ford, chief executive of the Association of Defense Communities, which advocates for the people who live around military bases. "You keep the base there, but you hollow out the mission. So you have a big hole in your community."
So far, the Army has almost gotten down to 490,000, largely through reducing its presence overseas, and shrinking the number of free-floating soldiers who aren’t assigned a base. The next 40,000, however, will largely come from people stationed at installations.
In Fort Drum’s case, the base could end up with a skeleton crew to keep the lights on. With a BRAC round, it could be used for some other purpose. Legislators still fear base closures in their states and districts. They’re also skeptical that the reductions will save much money: The last one, in 2005, focused on strategic goals rather than budget cutting and ended up costing $35 billion to implement.
“Congress will not go along with a BRAC round until they conclude that the alternative is worse,” says John Conger, the acting undersecretary of defense for installations and environment, at a conference in late June. The upcoming wave of hollowed-out bases, Conger thinks, will make his point the hard way. "It’s going to make it clear that this dynamic is more painful than the BRAC round."
Some installations might even benefit from a BRAC round, like Fort Benning in Georgia, a large base that could pick up extra troops if the Army is allowed to consolidate. But if the budget caps set by sequestration aren’t lifted, negative impacts could be more widespread. That’s why even Fort Benning, fearful of losing the units it has, is waging a campaign to avert the worst.
“Our whole focus is to go and attack sequestration and make it so blindingly obvious that nobody can stand it,” says Gary Jones, executive vice president for military affairs at the Columbus, Ga., Chamber of Commerce.
To that end, they’re placing billboards and encouraging people to write their legislators through a dedicated Web site, GrowBenning.com. And in what’s become standard practice for military communities fearing cuts, they’ve retained lobbyists — Columbus chose the Spectrum Group, which has picked up a bunch of retired high-ranking military officers recently to take drawdown-related work.
“We are fighting a strategic battle,” Jones said. “And the strategic battle is fought in the halls of Washington. So we need to make sure to make sure elected leadership has all the support they need.” For conservative Georgia, that means giving legislators the political cover they need to vote for higher budgets, despite a tea party base that opposes politicians for doing so.
When cuts do happen, the Army offers some assistance to communities through the Office of Economic Adjustment, which had $46 million available this year to help them pivot toward other industries.
Defense-oriented Northern Virginia, for example, has received money to help contractors hit by shrinking procurement dollars, or discharged military personnel who want to start their own businesses. Now, they can walk into an office and get free advice on alternative strategies like selling services to other countries instead of just the U.S. military.
It’s the kind of thing that should probably happen before defense spending starts to dry up, but doesn’t.
“People realized how dependent we were on DoD,” says Stephanie Landrum, president of the Alexandria Economic Development Partnership, which is administering some of the adjustment funds. “But I don’t think anybody was preaching diversification.”
That kind of assistance could also help places like the area around Fort Benning, which has other big economic drivers, like an auto plant that employs 12,000 people. If those businesses can be educated on the benefits of hiring veterans, people from the base might be persuaded to stick around.
Still, those funds aren’t enough to save places where little exists to take up the slack. Jefferson County, for example, has no other industrial anchors. So even if the Army keeps the base for future use, it’s unclear where else the people who depend on it will go to find work.
“They might try to mothball it,” McLaughlin says. “The problem is, you can’t mothball the community. That’s the issue.”
http://www.washingtonpost.com/blogs/wonkblog/wp/2015/07/07/the-biggest-and-most-disruptive-layoffs-in-america-are-coming-from-the-military/
Drawdown
Pay Cuts
Posted >1 y ago
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It is amazing how much defense spending and keeping a military in tact for future threats really has an affect on the economy, the communities, unemployment, and creating and holding jobs for people in America. Is cutting the forces by 40,000 really the answer for this country or do we keep this well trained force in place for the next 911. What a roller coaster we run through as a country. Economist need to find a way to keep a well trained force and the right balance of personnel in uniform otherwise entire communities go away and fall on hard times and there is 40,000 more people competing for jobs. Unbelievable 2nd and 3rd order affects of decisions made by the people we elected. What did cost us to build that force up over the last 14 years and now we just lay everyone off. Wasted money all around. I don't know what the fix is or the answer. It seems every time we want to balance the budget or stop spending (its the military). What about the Government salaries and the entitlement programs that don't create extra jobs? I could be totally off base on my thought process, so RP Members out there that are smarter than me when it comes to economics real me back in please!!
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