FU Budget Cuts
You notice there's not a lot of talk about budget cuts during an election year, all these clowns are spending all their time either trying to get elected or re-elected. That being said, FU agrees with the Chuck Woorley video below that cutting 1.2 Trillion Dollars from our budget should not be all that hard to do, unless of course your are worried about being elected by a group tree hugging albino squirrel lovers. You notice Chuck was able to do it without cutting a cent from the Department of Defense. We agree with Chuck on his top 10 list. However, we feel he left out one important cut, The Federal Reserve. Until our drunken sailors in Washington control the unlimited supply of Fiat Money being printed by the Fed, we are screwed. Hey, just by cutting the free mail for congress, we could maybe fix the oxygen system in the F-22 and F-35. Chuck, we have a vacancy in the FU Economics Department if you're game.
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NOW...here's some data to make ya go hmmmmmmm...
Defense cuts could further dim US jobs picture
MSNBC, 21 June 12, Eve Tahmincioglu
As the war in Afghanistan winds down, the impact on the nation’s employment picture goes beyond veterans returning home who are looking for work.
There are thousands of civilian jobs related to the war effort, and cutbacks in defense spending have already led to reductions in these defense-related jobs, including direct government positions or those with defense contractors. The loss of these jobs isn’t good news for the still-dim employment picture.
“It will create a greater supply of workers and create more pain overall for the U.S. work force,” said Gautam Godhwani, CEO of jobs website SimplyHired.com.
For May, the number of openings for defense-related jobs across the Web, including job boards and company jobs sites, declined by 4.2 percent compared to the previous month, according to SimplyHired.com research. And unless Congress acts to curb some of the projected defense cutbacks, he added, things will only get worse next year.
Indeed, Boeing officials recently warned that any further cutbacks to defense spending could devastate the defense industry and lead to thousands of jobs lost.
The decline in defense and aerospace employment has already begun. Last year, contractors shed nearly 35,000 jobs, and through May nearly 11,000 more have already disappeared, according to a report from Challenger Gray & Christmas released this week.
There has also been a significant downsizing of civilian workers at the Department of Defense, which saw its work force drop to 790,000 from more than 800,00 in fiscal year 2011, stated a report from the department's comptroller.
And the number is expected to drop further. A story in FederalTimes.com from December reported that in the next decade the Department of Defense’s civilian work force will plummet by 20 percent to 630,000, “the smallest since the Defense Department's creation in 1947.”
The combination of the war winding down, vets returning to the work force, cutbacks in defense-related industries and the inevitable reductions by their suppliers, Godhwani said, all add up to a recipe for fewer job opportunities.
But, he maintained, some states and occupations will benefit from the influx of more civilian workers with defense-related skills.
For example, in cities such as Detroit and Las Vegas, the number of workers for each job opening is about five to one, compared to Washington, D.C., and Boston where there are one or two individuals for every job, Godhwani said.
Also, he added, workers with specialized skills in defense-related industries, including technology and engineering, could be hired by employers who are having difficulty filling jobs.
Among defense-related occupations, all of the top 10 have been declining since 2009 and are expected to decrease even further through 2015, according to a 2011 Secretary of Defense report titled “Defense-Related Employment of Skilled Labor.” These occupations include business and financial, record-keeping clerks, construction trades, maintenance and computer specialists.
Even if some of these workers are able to fill a talent gap in the civilian work force, overall it’s going to be tough to add more jobless individuals to the long lines of the nation's under- and unemployed.
Sequestration might result in raft of contractor claims against gov
Defense Systems, 20 June 12, Staff
The drop-off in funding that would result from a possible sequestration might result in countless "requests for equitable adjustments for claims" resulting from modification to contracts up and down the defense supply chain that would be submitted to the federal government, said Lockheed CEO Robert Stevens at the defense giant's media day June 19, reports Philip Ewing at DOD Buzz.
Stevens warned that the drop-off in funding caused by the sequestration would effectively abrogate the contracts that the Defense Department has with its big prime contractors, which would, in turn force those contractors to abrogate the deals they have with their suppliers, the story said. The suppliers would charge a prime contractor, such as Lockheed, for the disruption, which would turn around and request that DOD compensate the company for all of the ripple effects of modifications or cancellations. (good luck suing the Govt…blood from a turnip syndrome?)
With such financial and economical crises looming on the horizon, Stevens added his voice to the chorus of DOD suppliers calling on Congress to find an alternative to sequestration.
Congress to Defense Industry: We Can't Save You
National Defense Magazine, 21 June 12, Sandra Erwin
Defense hawks on Capitol Hill have tried for months to pressure congressional leaders to call off the dreaded deficit-reduction (sequestration) law that mandates automatic budget cuts of $1.2 trillion — half for defense — over the next decade. Pro-defense Republicans on the House Armed Services Committee held hearings, hosted town hall meetings and posted videos on YouTube.
Nothing has worked, conceded a panel of lawmakers speaking to industry executives and investors June 21 at the Bloomberg Government Defense Conference, in Washington, D.C.
The political factions are so far apart that the chances of averting the so-called budget sequester before year’s end are slim to none, said Rep. James P. Moran, D-Va., who sits on the House Appropriations Committee.
“We're not talking,” Moran said. “There isn’t a deal in hand.”
House Republicans have ruled out raising tax revenues to partially offset the cuts. And Democrats have drawn a hard line against protecting the defense budget at the expense of social services or food stamps.
It’s time to face the reality that the political process has reached a dead end, said Rep. J. Randy Forbes, R-Va., chairman of the House Armed Services Committee’s readiness subcommittee.
Politicians’ old tired buzzwords such as “let’s be bipartisan … let’s put everything on the table” are pointless, said Forbes. “Regardless of what you put on the table, right now we don’t have a table.”
The defense industry — which has lobbied intensively against the cuts, arguing that they will trigger massive layoffs and weaken the U.S. economy — is going to have to be even more aggressive, said Rep. Peter Welch, D-Vt., chief deputy whip and member of the Homeland Defense and Foreign Operations Committee’s national security subcommittee.
Budget problems that should be solvable are now caught in a pitched ideological battle, and even the threat of losing defense industry jobs is not enough to end the standoff in Washington, Welch said.
Defense companies need to fight harder, he said. “The defense community has more credibility” than other sectors, Welch told the Bloomberg conference. “You’re in all of our districts, [you provide] real jobs, people want to support a strong defense posture. You guys have to go big, go bold. That’s my view.”
As if the news for defense contractors weren’t bad enough, panelists noted, efforts to ward off defense cuts also face a steep public relations battle as Americans become increasingly disengaged from the budget debate.
“When you talk to the public, there’s a glaze that comes across people's eyes when you use the word sequestration, so we stopped using it,” said Forbes. But it is not clear that even the more people-friendly term, massive defense cuts, gets the message across, he said. “This is a political crisis.”
Although sequestration would amount to about a 10 percent reduction from the defense budget next year, the pain would be borne disproportionately by Pentagon contractors because President Obama already directed that all government personnel accounts be exempt from the automatic cuts. (hmm…let’s see, who should I vote for now???!!!)
Congress also has moved to shelter war funds from sequester. The upshot is that the portion of the budget that is not being protected — mainly procurement of new equipment, research and development — will see a 15 percent cut, said Dov S. Zakheim, a former Pentagon comptroller and a senior advisor at the Center for Strategic and International Studies.
Weapon modernization and combat readiness are not high priorities, he lamented. “We’re on track to spend more on veterans than on active military in the next few years.” (Personnel or equipment?? So, what’s the problem?? Any of you veterans NOT OK with that?!!)
Zakheim echoed other panelists’ pessimistic outlook. “I don’t think this Congress can cut a deal,” he said. “If it could it would have done it by now.”
Defense industry can’t even count on the support of defense hawks such as Sen. John McCain, R-Ariz., who opposes the automatic cuts but continues to call for the termination of big-ticket military programs such as the F-35 Joint Strike Fighter, the USS Ford aircraft carrier and the Littoral Combat Ship.
These three programs alone are tens of billions of dollars over budget, McCain groused. “The American people should be far more angry than they are.” The biggest problem for Pentagon today is not budget cuts but the acquisition system, (NO KIDDING!) McCain said. “Once a program reaches a certain point and has enough constituencies around the country you cant’ stop it. Some of these programs need to be stopped.”
The culture is riven with corruption, said McCain. “We have a revolving door between Pentagon and industry. … There is an environment where overruns are not a major concern.”
McCain has joined Sen. Patty Murray, D-Wash., to draft bipartisan legislation that would compel the Obama administration to articulate in detail in the coming weeks the impact of sequestration cuts, both for defense and non-defense programs.
In their fight against sequestration, defense industry leaders have pointed out that the more troublesome issue for contractors are not budget cuts per se, but that fact that the Pentagon is not planning for the reductions and has not provided any clues on what programs might be targeted once the ax falls.
“There is no guidance,” said Brett B. Lambert, deputy assistant secretary of defense for manufacturing and industrial base policy.
He recognized that, amid the uncertainty, “people gravitate to the most negative behaviors.”
Lambert’s comments suggested that the Pentagon is not overly alarmed by the prospect of suppliers going out of business or choosing to exit the defense market as a result of the spending cutbacks.
“[Companies] are part of an economic structure,” Lambert said. “My fiduciary responsibility is to the taxpayer and the war fighter. Theirs is to the shareholder.” Lambert’s office is studying potential “points of failure” in the supplier chain, but only will act to protect a vendor if the product it provides is absolutely essential and cannot be obtained elsewhere.
After 10 years of rapid spending growth and with wars winding down, the industry has to shrink, said Gordon Adams, a former White House budget official and currently professor of international relations at American University.
A fear-mongering campaign about loss of jobs is purely political theater, he said. “We are in a defense builddown.” Sequester is poor fiscal policy, but “it’s not the end of the world.”
Lambert, in an attempt to lighten the somber mood in the audience, compared the budget crisis to Thelma and Louise. “It’s a great movie. But it ends poorly.”