J. Scott Applewhite / AP
Defense Secretary Leon Panetta, right, accompanied by Joint Chiefs Chairman Gen. Martin Dempsey, testifies on Tuesday before the Senate Armed Services Committee.
At a time when President Barack Obama is proposing more than $120 billion in new and enhanced tax incentives for companies to manufacture in America, not overseas, one part of the nation’s industrial base -- a sector where foreigners aren't allowed to fully compete -- is under siege.
Smaller defense budgets proposed by Obama and Defense Secretary Leon Panetta will cancel some made-in-America ships, airplanes and unmanned aerial vehicles and slow down the purchase of others.
The Obama budget also threatens to shut manufacturing and repair facilities, such as the 212-year old Portsmouth Naval Shipyard, which sits on an island between Maine and New Hampshire.
Obama’s budget blueprint calls for defense outlays to drop by 5 percent over the next two years, and fall from 19 percent of federal spending this year to 13 percent by 2022.
In a four-hour hearing before the Senate Armed Services Committee Tuesday, Panetta defended his call for fewer ships, unmanned aerial vehicles, and other hardware.
And he made the case for his proposal for two more rounds of the base realignment and closure (BRAC) process that would close bases and shipyards across America.
But he faced concerns and criticism from both Republicans and Democrats on the committee -- about the threat to blue-collar manufacturing and repair jobs as well to national security.
Sen. John McCain, R- Ariz., told Panetta that “perhaps most disturbing of all” was the fact that at a time when U.S. strategy is increasingly focusing on East Asia and the Pacific, “this budget would reduce shipbuilding by 28 percent.”
Sen. Roger Wicker, R- Miss., whose state is home to the Ingalls shipyard in Pascagoula, pointed to the 8.3 percent unemployment rate and noted that Obama’s budget proposal has various job creation ideas -- such as transportation infrastructure -- in it.
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“It makes no sense to me -- at a time when there is an effort to create more jobs with other spending -- to cut defense spending, which gives us the ‘two-fer’ of protecting the country and protecting the industrial base, which is a whole lot of Americans working to provide us with the infrastructure we need,” Wicker said. “It is a fact, is it not, that this budget will have an adverse effect on our industrial base?”
Panetta replied, “We’ve taken a lot of steps to try to protect against that happening, because we absolutely have to protect our industrial base and those industries that support the defense budget. We can’t afford to lose any more and, for that reason, we design an approach that will keep them in business …”
But keep them in business with fewer manufacturing jobs, Wicker noted.
“There will be, I understand that, and that does have some impact,” Panetta admitted.
Later in the hearing, pressed by Sen. Susan Collins, R-Maine, Panetta said he would make sure that “we keep our industrial base busy, serving our needs.”
“Once that industrial base is gone, you never get it back and once those trained workers go into other fields you’ve lost them forever,” Collins told Panetta. “And that would greatly weaken our capabilities.”
Armed Services Committee members such as Sen. Joe Lieberman, I –Conn., are also opposing delays in building the Virginia-class submarine, which is built in Connecticut and repaired in New Hampshire.
As for closing excess bases and shipyards, Panetta said, “I don’t know of any other way” to cut infrastructure and get the savings needed “without going through that kind of process.”
When Panetta served as a House member from California in 1991, he saw BRAC first hand when the BRAC commission closed Ft. Ord near Monterey, costing more than 16,000 jobs.
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“I’ve been through the process; frankly I don’t wish the process on anybody,” he told Sen. Jeanne Shaheen, D- N.H., who was defending the Portsmouth Naval Shipyard.
“Twenty five percent of my local economy was hit by virtue of a BRAC closure,” Panetta told her. But he said the community did use the closing as an opportunity to develop a college campus.
“I see very little support for the president’s proposal on BRAC,” Collins said, in an interview during a break in the hearing.
“If you look at the GAO reports on the last BRAC round, it has turned out to cost the government money, rather than saving money -- at least for the first five years. So I think there’s a great deal of skepticism both about the savings that would be produced and also whether there really is excess capacity.”
She said she did not think Congress would vote to launch another BRAC round. Portsmouth was on the hit list in 2005, but the BRAC commission overrode the Pentagon recommendation that it be closed. “Tony Principi, the BRAC chairman at the time, described Portsmouth Naval Shipyard as ‘the gold standard in naval yards.’”
The economic impact of closing the shipyard would huge in southern Maine, Collins said: “It’s a major employer in York County and beyond York County. Half the workers are from New Hampshire -- it affects both states”
In bipartisan accord was her Democratic neighbor, Shaheen who said after hearing, “The number one priority is national security. The Portsmouth Naval shipyard was created … because of national security – but there are a lot of good jobs there. To look at the equation without factoring that in, along with costs, would be shortsighted.”
One dissenter on the committee was Sen. Lindsey Graham, R- S.C., who said he did not consider defense manufacturing as “a job creator for America.” He also said he does think it’s necessary to consider another BRAC round -- “as hard as that is for my colleagues.”