DOD cuts: An election-year time bomb

“Sequestration” might be classic “inside the Beltway” jargon, but the
issue has the potential to have a real impact on the 2012 presidential
election if it’s tied to something that has everyone’s attention: jobs.

The $500 billion across-the-board cuts to the Defense Department set to take effect in January 2013 have spurred top defense contractors to threaten to send out mass layoff notices to employees right before the election in anticipation of the budget reductions.

{mosads}As they lobby hard for a fix from Congress to reverse the cuts, the companies, led by defense giant Lockheed Martin, have not been shy in pointing out that the timing of the layoff notices — federally required to be given 60 days prior to termination, or by Nov. 2 if they’re tied to sequestration’s start date — could play a role in the election.

But the cuts, sure to be a major part of the lame-duck battle over tax and spending issues in Congress, do not give either President Obama or Mitt Romney a clear upper hand in the election when it comes to defense and national security.

Neither presidential candidate has spent much time talking about the issue in recent weeks, even as the debate has intensified on Capitol Hill and as both campaigns look to win over veterans.

For Romney, the problem with sequestration is that the automatic spending cuts — roughly $500 billion to defense and non-defense discretionary spending each over the next decade — were passed by Congress in the 2011 Budget Control Act as part of a compromise between the White House and House Republicans to raise the federal debt ceiling.

Obama has based part of his campaign on running against a do-nothing Congress, and the sequestration cuts fit into that narrative. Administration officials, including the president, say that Congress must be the one to act to fix sequestration.

“It’s a plus for Obama right now, because if you say we’re going to have to start laying people off, he’ll say, ‘They made me sign this thing in order to raise the debt ceiling,’ ” said Larry Korb, a former Pentagon official now at the liberal-leaning Center for American Progress.

“ ‘They haven’t come up with any plan for raising revenues, and I’m open to a grand bargain here.’ ”

Romney has attacked Obama over the defense cuts before, arguing in a January Republican primary debate that the president was weakening the military with the $500 billion cut from sequestration as well as the $487 billion reduction that was agreed to in the Budget Control Act.

“The president is planning on cutting $1 trillion out of military spending,” Romney said. “We are cutting our number of troops. We are not giving the veterans the care they deserve. We simply cannot continue to cut our Department of Defense budget if we are going to remain the hope of the Earth. And I will fight to make sure America retains military superiority.”

Romney has proposed a bigger military and more shipbuilding for the Pentagon if he were to win the White House, although he hasn’t laid out in detail how he would pay for the increased defense spending.

The former Massachusetts governor faces an incumbent president who has an unusually strong record on national security, an issue that’s traditionally a Republican strength. Obama can point to the killing of Osama bin Laden, the end of the war in Iraq and other accomplishments under his administration to bolster his credentials.

Mackenzie Eaglen, an analyst at the conservative-leaning American Enterprise Institute, said that if Romney wants to focus on sequestration, he’s likely to try to capitalize on the industry’s warnings about a doomsday scenario — with a focus on the small businesses that would be affected.

“I don’t think you’ll see Romney with [Lockheed Martin CEO] Bob Stevens; I think he’s going to look for the small business shops, the guy who runs the food truck at the shipyard,” Eaglen said.

In Congress, there’s been a renewed push among lawmakers in both parties to try to avert sequestration through a one-year delay or via an elusive grand bargain.

Nearly all Democrats and Republicans — not to mention Obama’s Defense secretary, Leon Panetta — say sequestration would be devastating to the military, but the two parties disagree on how to replace it, with Democrats demanding tax increases be included and Republicans arguing that mandatory spending must be on the table.

GOP defense hawks in Congress have also sought to inject the defense cuts into the presidential race, accusing Obama of failing to lead on the issue. Sen. John

McCain (R-Ariz.), Obama’s 2008 opponent for the White House, has repeatedly called on the president to get involved in negotiations with Congress to stop the defense cuts.

The push in Congress has received a jolt of energy from the defense industry’s layoff warnings, as big job losses in defense-industry heavy areas of the country could have an impact on local races, too.

“Until industry acts, sequestration is a vague, amorphous problem that’s going to be really bad in the future,” Eaglen said. “Once there is workforce consolidation … then it becomes a real and immediate problem.”