NORFOLK — Vanguard Industries sells just about anything that can be worn on a military uniform. If massive proposed cuts to the Pentagon’s budget go through in January, there could soon be a lot fewer uniforms to adorn.
At the company’s Norfolk office, an array of accessories is on display in the showroom, including shoulder boards, pins, medals and the increasingly popular Navy SEAL insignia.
There’s even a “Military Accessory iPad Case.”
Defense-dependent firms such as Vanguard are thick on the ground in the commonwealth, from Northern Virginia — home of the Pentagon and myriad private contractors — to the Hampton Roads area, the site of the world’s largest naval station and several other bases.
That helps explain why the threat of huge defense cuts, scheduled to automatically take effect in January after the
congressional “supercommittee” couldn’t agree on a deficit-reduction deal last fall, makes local businesses so nervous and why the issue has become such a source of contention in the U.S. Senate race between George Allen (R) and Timothy M. Kaine (D).
“When the Department of Defense sneezes, we get a cold,” said Jack Hornbeck, president and chief executive of the Hampton Roads Chamber of Commerce. “Currently, about 40-plus percent of our economy is dependent on the Department of Defense. There isn’t much around here that wouldn’t be impacted economically by cuts.”
Allen has made attacking Kaine over the cuts a primary focus of his campaign message, criticizing the Democrat for backing the spending deal last year that set the cuts in motion. Kaine has fired back that most Republicans endorsed the deal, too, and that only he among the two has a substantive plan to avert what’s technically known as “sequestration.”
For all the near-term focus on the cuts, the two former governors also have decidedly different long-term approaches to defense issues.
Both have pledged to seek a seat on the Armed Services Committee, and they’d have big shoes to fill: The man they are running to succeed, Sen. James Webb (D), is a decorated Marine Corps veteran and a former Navy secretary who has become an influential voice on defense issues on Capitol Hill.
Few political issues have consumed as much oxygen in Virginia this year as sequestration, and it’s easy to see why.
A much-cited report from George Mason University’s Center for Regional Analysis estimates that the defense reductions alone could result in the loss of more than 130,000 jobs in Virginia.
(The non-defense cuts from sequestration could take an additional 70,000 jobs in the state.)
Industry representatives in Northern Virginia are especially concerned, including heavyweights such as Falls Church-based Northrop Grumman. Several contractors held a “Stop Sequestration Rally” in Crystal City during the summer.
Concerns about the cuts come as contractors are already significantly reshaping their businesses. Convinced that spending reductions will happen — regardless of whether sequestration occurs — local companies have in recent years laid off employees and revamped their structures. Northrop Grumman spun off its shipbuilding unit last year, while McLean-based Science Applications International announced in August that it plans to split into two companies.
At the Virginia Beach headquarters of Valkyrie Enterprises, which specializes in defense readiness and modernization, president and chief executive Gary Lisota is casting a wary eye toward Washington.
“In my 32 years in this industry I have never seen a more scary event overall as sequestration,” he said.
“I’ve spent many a sleepless night over the last six months or so thinking about it.”
The defense industry’s anxieties are heightened by the lack of a clear plan for cuts: The Pentagon intends to make across-the-board cuts, but it’s not clear how that would play out.
“Some people will get lucky and will support programs that aren’t hurt that bad, and some people will be devastated,” Lisota said.
Defense companies won’t be the only ones hurt by cuts.
“It isn’t just direct military expenses. It’s buying homes or renting apartments or purchasing cars or whatever,” Hornbeck said.
Kaine and Allen have been battling over the sequester on two separate fronts — who is responsible for our current budgetary predicament and who has the best plan to avert the cuts.
On the first point, Allen’s case is straightforward: From the start, he opposed last year’s budget deal that created the supercommittee and mandated massive spending cuts if the panel failed to reach agreement. Kaine backed the deal then and said in a July 21 debate in Hot Springs that the deal was “the right thing to do” — a quote that has since appeared frequently in anti-Kaine television ads.
Kaine counters that the budget deal he supported was backed by every Republican congressional leader as well as Gov. Robert F. McDonnell (R).
And although Kaine endorsed the original agreement, he has also said that he is opposed to the possibility of indiscriminate de fense cuts and that the Pentagon needs a clear road map for how to implement the reductions.
“I do have a plan: It’s a compromise, and it’s specific,” Kaine said in a Sept. 20 debate in McLean, “unlike anything I heard” from Allen on the subject.
He would allow Bush-era tax cuts to expire on income over $500,000 and remove tax breaks for oil and gas companies. He would also allow Medicare to negotiate with prescription drug companies for bulk discounts. Those three steps, Kaine said, would get Congress roughly three-quarters of the way toward the $1 trillion in cuts that need to be averted.
At the McLean debate, Allen said he would prevent the defense cuts by moving to “repeal and replace Obamacare” (although such a move would not save money, according to the Congressional Budget Office) and look for “redundancy in government.”
Allen also proposed to “unleash American energy resources,” bringing royalties to the federal government from increased oil and gas drilling, and raise revenue by closing unspecified tax loopholes.
And Allen praised House Republicans for passing a measure that would avert the defense cuts — although he has declined to clearly endorse the House bill, which would cut domestic programs more deeply — while criticizing the Democratic-controlled Senate.
“What has the Senate done?” Allen said. “Absolutely nothing.”
Part of the job of Webb’s successor will be simply to keep the valuable military assets the state already has.
Kaine touts the fact that as governor he fought to prevent the Navy from moving a nuclear aircraft carrier from Norfolk to Mayport, Fla. McDonnell, Kaine’s successor, also took up the cause along with the state’s congressional delegation, which battled the Florida delegation on several Capitol Hill fronts. The Navy said in February that it would indefinitely suspend the move.
But Virginia officials were not able to prevent the Pentagon from closing the Norfolk-based Joint Forces Command.
Allen has criticized Kaine for saying, when asked in 2010 about the possible closure, that “everything has to be on the table.”
Allen has proposed increased production of ships and submarines, a vital economic issue for the Hampton Roads region. He has also called for replacing aging military aircraft.
Beyond the broad idea of targeting waste and abuse in the Pentagon budget, Allen has not spoken favorably of making any defense cuts — a stance Democrats consider unworkable, given that Allen also opposes any tax increases.
Kaine has been more open to the possibility of reductions, although he vows to keep the military strong.
Kaine has been more outspoken on recent U.S. military engagements than Allen, calling for American troops to be brought home as quickly as possible from Afghanistan, “consistent with the need to make sure that Afghanistan poses no danger in the broader region.”
Kaine generally agreed with the U.S. action in Libya but criticized the Obama administration for not seeking the approval of Congress first.
Allen complained that President Obama failed to outline a clear mission.
The two campaigns have also sparred over Allen’s record on military and veterans issues when he served in the Senate. Kaine’s camp points to dozens of votes Allen took on Capitol Hill against increased funding for veterans’ health care and military equipment.
Allen’s campaign counters that many of the votes referenced by Democrats are misleading, making the case instead that Allen voted for several bills that boosted military funding, while increasing benefits for veterans’ health and for the families of fallen soldiers.
Marjorie Censer contributed to this report.