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October 2, 2014

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Politics:

Impact of looming ‘sequestration’ cuts to Nevada’s military bases difficult to gauge

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Nellis Air Force Base

An F-16 Fighting Falcon Aggressor flies over the Nevada Test and Training Range Oct. 19, 2009.

In political America, all eyes and minds are focused on Nov. 6. But for Nevada’s military bases and defense personnel, Dec. 31 might be the more important day to circle on this year’s calendar.

That, technically, is Congress’ last day to strike a deal to avoid pushing the country off the “fiscal cliff” — a proverbial construction that’s come to stand for the double-punch of across-the-board tax hikes and budget cuts set to take effect next year that will disproportionately affect the military.

On and off the campaign trail, politicians have been visiting Nevada and warning that the result of those automatic deficit-reducing measures would be catastrophic to the state’s many military communities.

But it’s difficult to determine just how concerned Nevadans should be about the so-called sequestration cuts because no one really knows what they are going to look like.

Here’s what we do know: At the end of the year, absent a lame-duck Congress deal on taxes and spending, the sequester will strike.

Sequestration is the brainchild of Sen. Harry Reid, who devised it amid last summer’s congressional standoff over raising the debt ceiling after a “super committee” of lawmakers failed to deliver a compromise on taxes and spending cuts. It is, on the surface, a $1.2 trillion cut to the budget — half from defense and half from almost everything else.

On paper, the sequester translates to about a 10 percent across-the-board cut to the defense department. Beyond that, there are few details on which programs would be cut or which states would be hardest hit.

“There is still uncertainty about this because we don’t know whether the (Department of Defense) is going to have or allow any kind of leeway for managerial discretion, protecting some accounts over others,” said Michael O’Hanlon, director of foreign policy research at the Brookings Institution.

To some extent, Nevada’s military installations could potentially be protected from severe cuts by virtue of the fact their missions align strongly with the Obama administration’s reprioritization strategy.

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Sen. John McCain of Arizona addresses a crowd at the College of Southern Nevada on the impact of large cuts on defense spending. Because Democrats and Republicans could not reach a budget reduction agreement, automatic cuts are scheduled to take effect at the beginning of 2013.

Even before the sequestration deal was struck, the Obama administration had begun moving away from building the ground troop capacity needed during wartime to focus more on the country’s post-Iraq, post-Afghanistan security needs in the Asia-Pacific region.

“The Asia-Pacific region in general is more of a naval and air theater,” said Jacob Stokes, a policy analyst with the politically progressive Center for a New American Security. “So, in broad strokes, the Air Force and Navy are going to be on the ascendancy and the Army is going to take some cutbacks.”

Nevada’s particularly unique combination of military interests puts the state in an enviable stance for that sort of planning. Nevada has no Army installations but does host the only F-16 naval fighter pilot training facility in Fallon Naval Air Base. The state also has one of the largest Air Force installations at Nellis Air Force Base. And abutting Nellis is the original drone base, Creech, which still plays a central role in overseas unmanned aerial drone operations.

“They are hugely significant not just to the U.S. Air Force but to our personnel. ... They are supporting guys in Afghanistan in shooting situations every single day,” said Mackenzie Eaglen, a defense expert with the conservative-leaning American Enterprise Institute. “But if we are talking in January, in a post-sequester trigger world, the military will not be able to avoid any cuts, from money that is supporting the war fighters to military personnel and to civilian personnel.”

In other words, Nevada’s military installations wouldn’t be able to escape the sequester cuts entirely.

“The cuts are supposed to come equally from the program, project and activity level,” Stokes said.

But it’s impossible to know exactly how they would be implemented.

“You can’t buy 80 percent of a ship,” Stokes said. “So there’s been a lot of back-and-forth about how they can wiggle out of that if a deal isn’t made in Congress.”

Representatives at Nevada’s military bases said they can’t speculate about the possible effect of the sequestration cuts.

“We would be on the receiving end of the decisions,” said Zip Upham, a public affairs officer from Fallon.

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David DuVall and Mary Lou Anderson protest outside a town hall meeting held by three Republican senators on the looming cuts to the federal budget known as sequestration.

Though he hasn’t weighed in with many details of where cuts might come down, President Barack Obama has put one restriction on the sequester: Military compensation is exempt.

But exempting pay cuts for military personnel means others — including contractors and civilians employed by the military — will have to take a greater hit if the Defense Department is to meet the requirement for the 10 percent cut.

And that’s where the sequester begins to become an economic quagmire.

Take Nellis Air Force Base, for example.

In fiscal year 2011, Nellis, Creech and the Nevada Test and Training Range were home to 9,748 active-duty military personnel and 1,061 National Guard members and reservists. Also on the base’s payroll were 5,246 civilian contractors and employees — about one-third of the total base workforce.

In Fallon’s much smaller workforce, the proportions are similar: The base’s payroll includes 902 military service members and 399 contractors and other civilians, according to that base’s most recent available calculations from fiscal 2008.

“This could be the IT people, it could be the kitchen staff, it could be the paycheck processors and it could even be the intelligence analysts,” Eaglen said.

In terms of payroll, the numbers are comparable: Nellis-Creech-NTTR spent about $856.1 million on military payroll in fiscal 2011 and $302.2 million on civilian employees and contractors. Similar numbers were not available from Fallon.

That means if military personnel are exempt from salary cuts, civilian employees at Nellis could see as much as a 15 percent cut in either workforce, pay levels or the size of contracts, O’Hanlon estimated.

“It depends what their economic relationship is to the base,” he said. “The civilian personnel will perhaps be furloughed one or two months on average. And the contractor workforce may be somewhere in between.

“On the other hand, if you’re providing a service to that base and that needs to be scaled back quickly, then it’s going to hit the contractor harder.”

Gaming exactly how things will shake out for Nellis and Fallon requires details that don’t exist yet. What’s clear is the bases should be bracing for some belt-tightening, even though they they may offer crucial services to the military’s long-term planning.

According to official DOD projections, defense expenditures in Nevada are slated to drop over the next few years — significantly. According to a report published in November 2011, direct defense expenditures, about $5.17 billion in Nevada during fiscal 2011, are projected to drop to $3.4 billion in fiscal 2016.

“What you’re seeing reflected in reports like that is the defense budget cuts that started in earnest under President Obama in 2010 that are just becoming manifest in communities across the country,” Eaglen said.

“While everything has been coming down, the cuts are disproportionately focused on hardware. ... So there’s some strategy here, but a lot of it is just budget-driven,” she said. “Now they’re having to cut people, too, to meet their ever-growing budget targets.”

The Defense Department has sustained one round of cuts to the tune of $487 billion over 10 years. That amount was mandated in the first, pre-sequester round of cuts Congress agreed on last summer.

If there’s another round of cuts, more draconian measures, such as base closures, could be on the table, Stokes said.

“Nevada’s bases would not be on the list, given the capabilities that they’re supporting ... but bases where they do a lot of training can be affected if the cuts aren’t done right,” Stokes said, referring to Fallon's and Nellis’ training programs. “When you’ve got a lot of force structure but you don’t have the money for upkeep, historically what you’ve seen then is there’s somewhat less money to spend on things like training.

“It’s important not to be Pollyannaish about where the budget’s going.”

But like everything else, the debate over the sequester’s potential effects must be viewed through the prism of the election.

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Senate Majority Leader Sen. Harry Reid of Nev. pauses during a news conference on Capitol Hill in Washington, Monday, Aug. 1, 2011, to talk about debt ceiling legislation.

Democrats, from Senate Majority Leader Harry Reid to former White House Chief of Staff Pete Rouse, say there is nothing to fear.

“I do not believe that we are going to go over the fiscal cliff,” Reid told reporters last month.

He has remained adamant that the only way to avoid sequestration is for Republicans to agree to certain tax hikes and closing certain tax loopholes.

Even if Congress misses its lame-duck session window to reach a compromise, Reid and Rouse may be right.

Falling off the fiscal cliff could trigger a second recession, but odds are the economic effect wouldn’t last for more than a few months. And just last month, Congress built itself a temporary cushion to break the looming fall: It approved a budget that continues current federal spending levels through March 31, delaying the actual budget chops by at least three months.

But experts warn that assuaging fears about the sequester is no better than indiscriminately raising them when so few details are known.

“I think it’s too soon to predict that this will be easily solved. If it were going to be easily solved, why hasn’t it already?” O’Hanlon said. “I’m hopeful that they’ll find a way. But I see no particular reason to think it’s a gimme.”

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  1. The Warn Act of 1988 stipulates that a company with 100 or more employess must be give a 60 day warning ahead of possible layoffs. The Obama administration does not want layoff notices arriving just before the election. So he tells the defense contractors do NOT issue the layoff warnings, we will pay for your legal defense when you get sued for not issuing the 60 day warning.

    Of course that means we taxpayers are going to be paying for the legal cost associated with this mess.

    http://hotair.com/archives/2012/10/02/lo...

  2. The American people overwhelmingly want a balanced approach...spending cuts and new revenue. Because Republicans are beholden to Grover Norquist's no new tax pledge we now face the so-called fiscal cliff. The sequestration plan was passed in the Republican controlled House with bi-partisan support including Paul Ryan and Eric Cantor. They now run from their vote.

  3. It looks more and more like our "leaders" are gonna let it happen so they don't have to vote on repealing a tax credit based on modest "earned income" and having dependents. By January 15, 2013, they can do another tax cut but let's hope they give it some thought--elimination of deductions and credits for EVERYONE. Sure, that hits the high earners much harder. We need to GRADUALLY but GET STARTED PRONTO, allow interest rates to rise, eliminate foreign aide, eliminate military aide, eliminate UN funding, eliminate troops stationed outside the nation starting with those in war zones and continuing until we bring them all home. As we go, we must resist the urges to slow the progress. Parts of the market will free up and respond but that does NOT mean we've gone far enough. Other parts of the market might not respond and might even over-react the wrong way, temporarily. To GET STARTED, let's pretend again that we have a free economy, that you work for what you need and want, that those who don't work don't get. Let's pretend we have a secure nation with SECURE BORDERS and start expelling the illegals and their kids usurping government services in K-12, court actions, law enforcement, incarceration, welfare programs, non-profit programs. Since WWII ended, we've been telling ourselves that we're the richest nation and that we can afford to give it all away. We must STOP SAYING THAT. We need to pay for the last 70 years before we buy anything else. We must secure our productive workers and students with potential as shown by academic performance. We must prioritize sustaining those who can--so they can. When they work, our economy works and we can afford to take care of our own. After we've got that straightened out we can fantasize about philanthropy. But we should not forget how we got into this mess--long term spending, limited savings, listening to those who tell us what we want to hear.

  4. So Reid still insists that it's the Republicans who are unwilling to compromise, but "He has remained adamant that the only way to avoid sequestration is for Republicans to agree to certain tax hikes and closing certain tax loopholes."

    So Reid's definition of "compromise" is "the other guy has to do exactly what I want". (and even then his answer doesn't come up with nearly the amount needed)

    Simple arithmetic says that in addition to Reid's "increase taxes" answer, there would also be a "decrease spending" answer and infinite variations that combine the two.

    Everyone should recognize that int his case BOTH parties are just as guilty of obstructionism. Both call for compromise, but neither is willing to do so. The Republicans are unwilling to accept tax increases and the Democrats are unwilling to accept spending cuts.

  5. wendor, you're funny. I agree with your comments on Senator Reid.