1.53 million jobs are at risk (from potential defense cuts).
U.S. Rep. Randy Forbes, R-4th, is warning that potential cuts in defense spending would inflict mass destruction on the U.S. economy. Forbes, whose district is anchored in South Hampton Roads where military installations dominate the economy, unveiled a web ad saying the zeal to cut the nation’s debt has left U.S. defense vulnerable. The commercial says Congress must turn to other programs for savings, or face "catastrophe. " "1.53 million jobs are at risk," the ad’s narrator says. "Pink slips are waiting to be handed out." We wondered if 1.53 million defense jobs really are at risk in the latest round of federal budget negotiations. So we decided to take a look. First, a little background. After much debate in August, Congress agreed to raise the nation’s debt ceiling in return for long-range budget cuts. The first part of the deal called for reducing overall spending by $900 billion over the next 10 years, including about $400 billion in defense cuts. The defense budget is now about $700 billion a year. The legislation set up a 12-member, bipartisan super committee of senators and representatives to cut an additional $1.5 trillion in overall spending. If the group fails to reach consensus by Nov. 23, then $1.2 trillion in reductions will automatically occur -- half from defense and half from domestic programs. That cut to defense, combined with the $400 billion in reductions already agreed on, would mean a total loss of $1 trillion in defense money over the next 10 years. How does Forbes take that figure and compute job losses? Joe Hack, Forbes’ spokesman, pointed us to a comment by Secretary of Defense Leon Panetta in September that a $1 trillion defense cut could add 1 percent to the country’s unemployment rate. Hack then referred us to Bureau of Labor Statistics data showing the size of the U.S. labor force at about 154 million in September. Cutting 1 percent of that would lead to the loss of 1.53 million jobs, he said. We ran the numbers ourselves and found Forbes to be accurate. We came across other estimates that conclude $1 trillion in defense cuts would lead to significant layoffs, although not quite as high as Forbes states. The Department of Defenses says about 6 million jobs are supported by military spending, including 3.8 million private sector jobs, 700,000 Department of Defense jobs and 1.5 million active-duty service members outside of reserve units. "Sequestration ($1 trillion in cuts) assumes across the board spending cuts with losses peaking in the 2013-2014 time period, with 1 million to 1.5 million jobs lost and that could increase the U.S. unemployment rate by nearly 1 percentage point in the near term," said Lt. Col. Elizabeth Robbins, a spokeswoman of the Department of Defense. So Forbes’ number is at the top end of what the Department of Defense estimates as far as job losses. It could be as high as 1.5 million but as low as 1 million, according to the Pentagon. We asked the Defense Department to direct us to any underlying reports showing how they arrived at their numbers for job losses and lower unemployment rate, but they didn’t provide any. The Aerospace Industries Association, which represents aerospace and defense companies, estimates $1 trillion in defense cuts would cause a loss of slightly more than 1 million jobs. Some layoffs would occur among defense industry contractors and suppliers, but the bulk -- some 653,570 jobs -- would be lost in communities due to the to the loss of payroll spending associated with those jobs, the report states. The report was authored by Stephen Fuller, director of the Center of Regional Analysis at George Mason University. In a response to questions from Forbes at a October 26 hearing before the House Armed Services Committee, Fuller said his job loss projections don’t include tallies of lost active duty members or civilians employed by the Department of Defense. In an October 14, 2011 op-ed in the Wall Street Journal, the House Armed Services Committee Chairman, Buck McKeon, R-Calif., said automatic cuts from sequestration "would kill upwards of 800,000 of our active-duty, civilian and industrial American jobs." Claude Schafin, a House Armed Services Committee spokesman, said McKeon’s analysis doesn’t take into account any indirect layoffs in communities that would happen as a result of losses at the Department of Defense and their contractors. Projections of a 1 percent unemployment spike losses have drawn skepticism from some advocacy groups who charge they’re overblown. A study by Heidi Garrett-Peltier, a research professor at the University of Massachusetts, concludes the job losses from defense spending would be less than the Department of Defense estimates. Her work was funded by The Institute for Policy Studies, which says it advocates for a U.S. foreign policy based in part on demilitarization. In an interview Garrett-Peltier said a $1 trillion military cut over 10 years would cost about 860,000 jobs funded either directly or indirectly by the Department of Defense. If you include additional jobs losses in communities from a loss in spending from laid-off employees, the jobs loss would be 1.1 million, she said. Garrett-Peltier said government spending on defense does not generate as many jobs as investments in health care, education and other areas. "Are we better off cutting $100 billion in the defense budget or from education, health care, clean energy?" Garrett-Peltier said. "We would lose more jobs (from domestic cuts) than cutting $100 billion a year in defense." Our ruling: Forbes, in a web ad, says 1.53 million jobs would be lost if defense cuts hit $1 trillion. The congressman is clearly presenting a worst-case scenario, basing his figures on a statement by Defense Secretary Leon Panetta. The actual estimate by the Department of Defense -- which Forbes does not note -- is job loss between 1 million and 1.5 million. Other experts come up with smaller estimates, although their math does not always include all potential layoffs from reduced military -- such as local businesses, active duty members and the like. We don’t want to minimize the economic impact of $1 trillion in defense cuts. Forbes’ statement on the resulting job loss is credible, but very much on the high side estimates out there. We rate his claim Mostly True.
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