Federal defense spending fuels a large chunk of Virginia’s economy, so it’s unsurprising that U.S. Senate candidates George Allen (R) and Timothy M. Kaine (D) are both passionately opposing heavy-handed cuts in the Pentagon budget now scheduled to take effect Jan. 2.
The two rivals have repeatedly raised the issue as they campaign. Each uses the word “devastating” to describe the impact in Virginia. The topic is practically certain to come up in their Thursday debate in Fairfax County.
Their rhetoric is somewhat misleading, given that the winner won’t take office until Jan. 8. Whoever triumphs will arrive too late to play any direct role in deciding whether the cuts — under a budget process known as sequestration — happen or not.
Furthermore, despite warnings from all sides about the economic damage that would result nationally, it seems increasingly likely that some sequestration will occur.
At a downtown conference Tuesday designed to help local defense contractors prepare for the cuts, experts predicted that the lame-duck Congress and President Obama (reelected or not) will fail to reach a deal to prevent them.
“I would count on it at this point. A cynic might say there’s a lot of manufactured outrage among the politicians who would be responsible for this,” said John Hillen, chief executive of Sotera Defense Solutions and a State Department official in the George W. Bush administration.
Some area firms are already preparing to set up severance packages for laid-off workers.
Sequestration would automatically trim many military contractors’ revenue by nearly 10 percent across the board, without regard to the importance of the program affected. It would also reduce much non-defense spending.
The process was actually designed to be distasteful. When Congress and Obama adopted it in the summer as a desperate gesture to trim the deficit, the idea was that such reductions would be so painful and foolish that the two political parties would surely find a compromise in time to prevent them.
It hasn’t happened. Now we’re facing a process that Ernst & Young LLP partner Deborah Nixon, speaking to the forum organized by the Greater Washington Board of Trade, compared to “doing cosmetic surgery with a chain saw.”
Even if the high-profile Senate race won’t affect the outcome, Virginia voters can learn a lot about the differences between the two candidates by examining how they propose to handle the defense budget.
Republican Allen’s position is firmly on the conservative side. He says that he wants no defense cuts now and that he opposes increasing taxes to protect military spending.
Allen says tens of billions of dollars of savings can be achieved by eliminating waste and fraud in government programs such as Medicare. He says equivalent amounts of new revenue, or more, can be found by promoting oil and gas development offshore and in protected areas in Alaska, and by spurring economic growth.
(Allen’s campaign also said huge savings could be achieved by repealing Obama’s health-care overhaul, but that’s questionable. The Congressional Budget Office has said the health plan wouldn’t add to the federal deficit.)
In a break with other prominent Virginia Republicans, Allen has consistently opposed the budget deal adopted in the summer that included sequestration. That puts him at odds with House Majority Leader Eric Cantor and Gov. Bob McDonnell, who, like Kaine, supported it partly because it was necessary to avoid a federal default.
Kaine has adopted a moderate Democratic stance and emphasized his willingness to be flexible in order to reach a deal. He’s been more specific than Allen about where large-scale savings could be achieved to start to reduce projected spending by the $1.2 trillion over 10 years necessary to avoid sequestration.
Kaine would raise $500 billion by raising taxes on those earning $500,000 a year or more. That’s less far-reaching than Obama’s proposal to up taxes on those earning $250,000 or more.
The Democrat also says Medicare could save up to $240 billion in prescription drug costs by empowering the government to negotiate for better prices.
Kaine, unlike Allen, would also accept some targeted defense cuts as part of a broader package of tax increases and non-defense cuts.
Anyone familiar with this column knows I lean toward Kaine’s position. I’m open to raising taxes for worthy purposes, like deficit reduction, and I think there’s fat in the Pentagon.
Regardless of whom Virginia picks, the state should brace for economic pain in the new year.
I discuss local issues Friday at 8:50 a.m. on WAMU (88.5 FM). For previous columns, go to washingtonpost.com/mccartney.