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Report shows business impact of defense cuts

Aug. 22, 2012 - 12:45PM   |   Last Updated: Aug. 22, 2012 - 12:45PM  |  
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A pro-defense think tank has issued a new report that shows by congressional district the impact on local businesses of the potential $500 billion in across-the-board budget cuts looming in January.

The report does not include any assumptions about potential military or civilian personnel reductions, nor does it try to factor in the threat of furlough of civilian workers, which also would have an impact on local economies.

Released late Tuesday, the">report, from the nonpartisan, nonprofit Center for Security Policy, comes as Republicans are trying to blame the Obama administration and the Democratic-controlled Senate for the possible impact of automatic defense cuts in January as part of a process known as sequestration.

The cuts, which would total about $1.2 trillion across the federal government, would kick in unless Congress comes up with its own alternative debt-reduction plan.

Republicans argue that the House of Representatives in May passed a budget plan to avoid the $50 billion to $55 billion in first-year defense cuts under sequestration, but the Democratic-controlled Senate has not taken up the bill and President Obama has not pushed the Senate to act.

In an interview earlier week with a Virginia newspaper, Obama expressed a willingness to wait until after the November elections to settle disputes over the defense budget and details of a deficit reduction package to avoid sequestration, in hopes that Congress would be in a better mood to compromise.

The Center for Security Policy report is designed "to help local officials and businesses prepare for the possible impact of job losses and the harm to local communities" under sequestration, the group says in a statement.

The impact statements include not just the potential 8 to 10 percent reduction threatened by sequestration but also the $487 billion in defense cuts approved by Congress and signed by President Obama as part of last year's Budget Control Act. The combination results in spending cuts of more than 18 percent.

To make the calculations, the report looked at defense contracts for businesses in or immediately adjacent to congressional districts.

For example, in California's 9th Congressional District, represented by Rep. Barbara Lee, a Democrat who opposes big defense spending, the report identifies 1,183 contracts mostly for small businesses totaling $541.4 million in 2011. An 18 percent reduction would potentially cut $97.4 million from contractors in the district, which includes the cities of Oakland, Hayward and Berkeley.

In the Houston, Texas, congressional district represented by Republican Rep. John Culberson, the report shows $1.7 billion in 1,740 contracts. An 18 percent cut would total $93 million.

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