In his welcome message to his new (and old) constituents in the new 10th Congressional District, Rep. Mike Turner remarked that automatic defense cuts will go into effect in two months. The cuts would result from sequestration, part of a previous financial deal between Democrats and Republicans.
According to Turner’s message, sequestration could cost the area thousands of jobs. The cuts “will harm our national security and directly impact the southwest Ohio community. Wright-Patt is a critical economic engine with nearly 30,000 employees on base and another 20,000 off base, contributing over $5 billion to our region each year.”
In short, significant cuts would cause severe economic fallout in the Greater Dayton area.
Wright-Patterson Air Force Base is one of the largest employers in Ohio, and the key economic player in Dayton. In addition to the base are numerous defense contractors who employ a significant part of the Miami Valley. Cuts on the base will have ripple effects off base. The newly unemployed are likely to leave the area or compete for a smaller pool of remaining jobs. Dayton’s gradual decline would likely continue and accelerate.
None of this should be surprising—in fact, it has happened before, and not all that long ago.
With the Iraq and Afghanistan Wars winding down, there was bound to be some drawback in defense expenditures (not savings because that money is, or will be, spent elsewhere). This is similar to the mid-1990s about the time when the House first moved toward a balanced federal budget.
It was a byproduct of the end of the Cold War and the post-Gulf War peace. Consequently, there was less need for a robust military force, so, effectively, the House balanced the federal budget in part by cutting defense. Back then, it was called the “peace dividend.”
As part of a prior debt ceiling deal, Congress and the president agreed to automatic spending cuts and tax increases. Unfortunately for the Dayton defense sector, the biggest part of the cuts come from the Defense Department, at 11% per year. Those cuts were put off for two months with the New Year’s Day tax deal, but they seem almost inevitable at this point.
Rep. Turner’s charge is to look after his district’s best interests, which will include fighting to minimize cuts to WPAFB. He may team up with members of Congress from other military districts and states to stem the tide; however, former Sen. Chuck Hagel—the prospective Defense Secretary—has stated that he believes defense spending should be reduced dramatically. On this point he disagrees with current SecDef, Leon Panetta, who opposes slashing his department’s budget so substantially.
At any rate, Dayton should brace for the biggest local economic shock since GM and Delphi evacuated the region.