Bacon's Rebellion

Democracy Thrives in Sunlight

Military Spending Cuts will Trump Virginia’s Best Business Climate

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by

James A. Bacon
in

With the nation’s best business climate, Virginia is in a better position than other states to weather the economic storm, said Patrick O. Gottschalk, secretary of commerce and trade, over the weekend at a small business awards ceremony in Manassas.

I love Pat. He’s an old friend of mine and a wonderful guy, and he’s done a solid job as secretary of economic development. But he’s also a team player, and he’s touting the party line. While I agree that Virginia is well positioned to attract new business, we’ll be fighting more than a general economic downturn in the years ahead: We’ll be contending with the biggest cuts in defense spending since the early Clinton administration.

True, Virginia has won the best-state-for-business honors from Forbes magazine for the third year in a row, as Gottschalk noted and was duly reported by the Washington Post. That’s Virginia’s ace in the hole. Unfortunately, Rep. Barney Frank, Massachusetts’ fourth district congressman and one of the most senior and influential memebrs of Congress, is holding a royal straight flush.

Frank, riding high in what’s shaping up to be a near filibuster-proof Democratic majority in Congress and the most liberal Democratic president ever elected in American history, will have a lot to say about U.S. spending priorities.

Here’s what he told the editorial board of one of his home-town newspapers, the Standard-Times in New Bedford. As the newspaper wrote, he “called for a 25 percent cut in military spending, saying the Pentagon has to start choosing from its many weapons programs.”

I’m not arguing about the rightness of wrongness of Frank’s priorities. The Pentagon, like the rest of the federal government, needs to make tough choices and cut spending. I’m simply noting that for the past eight years, Virginia — Northern Virginia and Hampton Roads especially — have had enjoyed huge increases in military spending. In the next four to eight years, those regions will be contending with military spending moving in reverse. Frank may not get his 25 percent cuts. But what if he gets 10 percent cuts? It won’t be a pretty picture.

To think that the Pentagon-fueled prosperity that Virginia has enjoyed since 9/11 will continue indefinitely is a hookah dream. To fail to prepare for it is folly.

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9 responses to “Military Spending Cuts will Trump Virginia’s Best Business Climate”

  1. Larry G Avatar
    Larry G

    well….. is military spending in Virginia really just another form of social welfare?

    It’s kind of amusing to see folks who fret about the wanton wastefulness of the Federal Government… fret about.. the Federal dollars they might lose if the Feds actually get serious about spending.

    So… to help balance the Federal Budget (a conservative concept concept that Virginia itself must do for it’s own budget)…

    … Virginia… would have to further tighten it’s fiscal belt?

    The irony here is so rich and so hypocritical as to be amusing….

    Sounds a lot like the “we gotta cut all these massive earmarks…but not the ones our state gets…..”

  2. charlie Avatar
    charlie

    any new president is going to have to scale down DOD/national security spending dramatically.

    NoVA will be hurt by reductions in military contractors, and intelligence contractors. Easiest place to cut is also the navy capital budget. McCain could make an argument “I know where the fat in the military is” but can’t during the campaign as the fat is new navy ships and new fighter jets.

    Obama is probably better for VA as there are limits on how much a D can cut the DOD budget. the national security/intel budget, however, is ripe for the picking.

  3. Anonymous Avatar
    Anonymous

    Watch how fast intel and national security specialists become infrastructure engineering specialists when the Obama WPA kicks in.

  4. James Atticus Bowden Avatar
    James Atticus Bowden

    So what per cent of the GDP goes to Defense? Class…

    Even if Barack Hussein Obama cuts defense spending, he will spend other federal money. Washington is New Rome – until we surrender or throw away our Superpower status. So, NoVA will be getting more money. Tidewater may not.

    So, it goes.

  5. Anonymous Avatar
    Anonymous

    JAB – not so fast. What other businesses are in NoVA that aren’t related to defense/homeland security? There’s IT, but IT is only so big. How many networks does the Department of Labor need?

    Obama would likely move considerable spending from NoVA to other places. NoVA won’t dry up, but it’s salad days would gone for the foreseeable future.

    A lot of Virginia residents who are expecting the Messiah will soon find that he’s saving other parts of the country. As I said earlier, that’s not to say that DoD expenditures are all sacred.

    TMT

  6. Larry G Avatar
    Larry G

    Some of the Republican types cannot seem to understand that when they say that they'll keep taxes low and let everyone keep more of what they earn – that it does not square with their recent past history of earmarking and the Iraq war – which they essentially claim does not "count" as part of the budget…

    So… our friends on the right have been saying they won't raise your taxes – but they create huge deficit budgets with long term debt.. passed on to future taxpayers.

    The basic.. tried & true, steady-as-you-go Republican brand of fiscal responsibility has seemingly evaporated.

    It's NOT okay to raise taxes (or defer) them for health care but it's just fine to do the same exact thing for military adventures….that we "had no choice" …

    I hope that at some point… that at least some of the Republicans realize that their "real" brand is still valuable and valued by voters – even this one – but the current crop are not to be trusted with a dollar.

    This is what is killing McCain – people no longer trust Republicans to conduct fiscally-responsible governance.

    and here's the killer – we run a huge deficit due to the military.. and instead of tax policies to responsibly pay off the deficit.. the Republicans advocate cutting taxes further.

    In a previous time & place, it would be the Republicans that we would fear… getting into office.. and whacking spending … cutting excess spending by all departments including DOD and keeping the government on a responsible even fiscal keel.

    Now.. who knows exactly what the Republicans really stand for anymore?

  7. Anonymous Avatar
    Anonymous

    “Military Keynesianism is a government economic policy in which the government devotes large amounts of spending to the military in an effort to increase economic growth. This is a specific variation on Keynesian economics, developed by English economist John Maynard Keynes. Instances commonly supplied as examples of such policies are Germany in the 1930s and the United States in the 1980s, although whether these assessments are accurate is the subject of vigorous debate.”

    http://en.wikipedia.org/wiki/Military_Keynesianism

  8. Anonymous Avatar
    Anonymous

    Larry — I’m not advocating anything re the DoD budget. I’m simply making the case that Virginia’s prosperity is, IMO, highly tied to military and national security spending. (I just had a tour of the CIA last evening. It boggles my mind as to how large an operation that entity must be. I can only speculate as to how much money it must spend.)

    Reasonable people can have different priorities vis a vis spending and taxes. What drives me crazy, however, is how so many people act one way and don’t understand the consequences of their actions. And then they become upset at the results of their actions.

    For example, I still hear many people in Fairfax County bemoan the one-way relationship with Richmond — dollars down I-95; pennies up I-95. Yet, most of these same people fully support policies that exacerbate the revenue flow (prime example — Mark Warner’s 2004 tax increases). That is insanity in my view and also the reason why I’m less upset with the Descendents than is our good friend Groveton. We are the buffoons who make things worse.

    The same applies at the federal level. Cuts in military and national security spending will have a serious negative impact on the Commonwealth. Let’s not pretend that they will not. But, having said this, changing federal spending priorities is not wrong per se. Reasonable people can decide that we spend too much money on defense. What is wrong, IMO, is not understanding the effects and then complaining about them.

    TMT

  9. Larry G Avatar
    Larry G

    One way of looking at this – perhaps a contrarian RoVa way is that NoVa has done nothing to deserve the Federal largess so it belongs as much to Rova as it does to NoVa.

    NoVa has no discernable economic strategy other than to catch the federal dollar confetti.

    Some would say – that the mere political boundary lines of NoVa mean nothing and that all of Virginia is entitled to get some of those dollars.

    Is NoVa any more or less “subsidized” that the “incentives” that Virginia gives to attract industry to RoVa?

    As far as the cuts having a serious impact on the Commonwealth –

    … how can we have a national fiscal policy that treats real live debt – like the money for the Iraq War and the bailout as “off budget”? in the first place?

    You and I should be so lucky as to proclaim to the bank .. that we had a run of bad luck – no fault of our own.. therefore we don’t have to repay our debt.

    These guys could not run a real small business or even their own personal financial affairs .. much less the country…

    out they go – and good riddance… and DO let the door whack you on the way out…

    Virginia would have been better off ..in the longer run.. to develop it’s own economy – independent of the Fed deficit spending juggernaut…

    so we lose our sugar daddy..

    we need to tighten our belt.. make RESPONSIBLE cuts like those being proposed by the VDOT folks.. slim our government down.. and live within our means – for a change.

    Perhaps now.. Virginia will join the other states who are asking if our current trade policies are really “good” for our citizens.. as it might be for the rich corporate types.

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