More Defense Cuts: Local Impacts?

More Defense Unknowns: Local/State Impact?

We know the Defense Department (DOD) is planning a $480 Billion cut in the DOD budget in the next 10 years. Now that the Super Committee has failed there are many questions; will the ‘trigger’ (Another 600 Billion in DOD cuts) go into effect in 2013 or will Congress change the rules? Regardless of which option, the region will be affected, the degree is the question. I am sure the Navy has different contingency plans for all options.  We will hear many rumors of the ‘what if’s’ in the next months, changes will happen.

What we know, scheduled losses for the region; Air Force Langley loss of 500 positions, Decommission of USS Enterprise, 4 Ships to Spain, 2 F-18 squadrons to Lemoore, no LCS. The Navy announced last week they are going to ‘lay off ‘ 3,000 sailors, I am sure many will be from this area.  Congress is finalizing the 2012 budget, and presently the senate has reduced the DOD request by $21 Billion.

The $450 Billion cuts that DOD is planning in the next 10 years will be known in February, with the submission of the 2013 budget.  Although unknown there will definitely be DOD cuts that will have a negative impact to the region.

The Super Committee failed, will the ‘Trigger’   go into effect and additional $600 Billion (Total of $1 Trillion) be cut from the DOD budget?  Secretary Panetta has called the ‘trigger’ a “Doomsday” scenario for the Pentagon. What will be the ‘real’ impact on DOD is unknown, many conjectures, reducing the number of Carrier Battle Groups,  reduce number of F-35’s, and a reduction of all the Military forces. Some predictions say, the Military will be the size it was pre World War 2.  Whatever happens it does not appear as automatic as it was prior to the announcement, talk of loopholes, intense lobbying and political dealings. Regardless of the ultimate decision on the ‘trigger’ DOD will probably be forced to take further cuts.

The impact; the State, the third largest reciprocate of DOD spending and the regions  45% of Gross output comes from DOD, will be impacted, the amount of the reductions is the question. If capabilities, procurement or force structure is reduced, Virginia and the region will be impacted further.

If the State/Region DOD spending is reduced there will be a negative economic growth to the State/Region. The amount of decline is unknown, not a ‘Doomsday’ for the region but, as stated in the State of the Region, Hampton Roads 2011 besides the obvious, shipbuilding and the repair industry others will be affected. “Suffers will include a wide range of merchants and employees who sell everything from automobiles to pizza.  LOCAL (STATE) governments will experience Declining Revenues and this will Impact schools, law enforcement and a host of other services and activities”.

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