McCain: Spending gridlock threatens Arizona’s defense industry - East Valley Tribune: Business

McCain: Spending gridlock threatens Arizona’s defense industry

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Posted: Sunday, August 26, 2012 2:00 pm | Updated: 12:30 pm, Tue Sep 4, 2012.

As Arizona celebrates the Pentagon’s decision to base three F-35 fighter squadrons at Luke Air Force Base, U.S. Sen. John McCain warned Thursday that potential defense spending cuts could cost thousands of jobs and $3 billion to the state’s economy.

“We need the people of this country to understand the devastation and the inability to defend our nation if these cuts take place,” McCain said after meeting with West Valley mayors and other leaders.

Roughly $1.2 trillion in cuts from defense and non-defense programs would begin Jan. 2, 2013, if the president and Congress can’t agree on more than $1 trillion in deficit reductions by the end of the year.

The first $110 billion in cuts would take place in 2013, according to the deal struck in 2011 to raise the nation’s borrowing limit. Defense spending would be cut by $55 billion in 2013.

Urging Arizonans to pressure their elected leaders and President Barack Obama, McCain said both major political parties share some blame, though he said the president should be forcing Congress to resolve the matter.

“It requires the president’s leadership,” McCain said. “So far the president’s been A-W-O-L.”

The White House Press Office didn’t respond to a request for comment Thursday, but Obama told The Virginian-Pilot newspaper Aug. 20 that Republicans’ refusal to raise taxes on wealthier Americans is blocking a deal.

McCain cited a 2011 study by George Mason University economist Stephen Fuller estimating that Arizona would lose more than 33,000 jobs and $2 billion in earnings if the mandated cuts take place in 2013. The study, funded by a defense industry trade group, pegged the total loss to Arizona’s gross state product at $2.9 billion.

McCain said he’s in favor in savings in defense and domestic spending, “But you don’t want to do it with a meat ax.”

He said he doesn’t anticipate any cuts to the F-35 program but added that any delays or cost increases could lead to the government buying fewer F-35s.

Peoria Mayor Bob Barrett the potential defense spending cuts are looming at exactly the wrong time.

“We just now feel like we’re coming out of a bad economy,” Barrett said. “[The cuts are] going to push us back.”

If the cuts take effect without a deal, he said, public pressure will force one.

“You’re going to take a hit,” Barrett said. “Hopefully it will be a short-term hit.”

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