Sequestration Could Lead To Job Cuts In Connecticut At Defense Contractors

by Categorized: 2014 Election Date:

With automatic budget cuts looming in Washington, the state\’s Congressional delegation says Connecticut could eventually lose as many as 36,000 to 42,000 direct and indirect jobs if lawmakers fail to reach a fiscal deal.

The cuts would not take effect immediately and would be phased-in over time.

In a worst-case scenario, there could be cuts at major defense contractors like East Hartford-based Pratt & Whitney, Stratford-based Sikorsky, and Electric Boat if reductions at the Pentagon are enacted. Cuts could also come to teachers in Head Start, vaccines, and meals for senior citizens. It could potentially jeopardize the construction of a planned second submarine at Electric Boat in 2014, along with the potential halting of repairs to the USS Providence and the USS Miami submarines.

\”It won\’t be an immediate, earthquake-type effect, but it will be a cascading, building impact on job growth and employment, which we really need to avoid because we are all-too-slowly recovering in Connecticut,\’\’ U.S. Senator Richard Blumenthal told reporters Monday. \”The estimate is it would deprive us of about $3 billion out of a $240 billion GDP in Connecticut, which is a major hit to revenue and profits for our businesses but more importantly to employment here.\’\’

He added, \”There are various estimates as high as 36,000 [in job losses]. Those estimates may be too high, but we know for sure that there will be a huge hit in the tens of thousands of jobs.\’\’

Some critics say that potential cuts have been widely overblown because they represent only 3 to 4 percent of the federal budget. On Wall Street, some of the talk is being dismissed.

\”The hype over sequestration is a joke,\’\’ famed investor Stanley Druckenmiller said on CNBC last week. \”I\’m just not worried over sequestration.\’\’

A well-known disciple of investor George Soros, Druckenmiller has wide influence with the insiders who trade millions of dollars of stocks on a daily basis.

Connecticut\’s defense industry is watching the drama in Washington closely.
\”We\’re stuck in limbo,\’\’ said Paul Jackson, a spokesman for Sikorsky. \”We\’re doing what everyone else is doing: watching to see what Congress decides, and how and if it will impact the Pentagon and us.\”

At Electric Boat, officials are also waiting for more details. \”We really don\’t know what the impact will be…until we get some specific direction from the Navy,\’\’ said spokesman Robert Hamilton. \”There are too many unanswered questions.\”

John Rathgeber, the president and CEO of the 10,000-member Connecticut Business and Industry Association, appeared at a news conference at Blumenthal\’s Hartford office to say that the sequestration could lead to further problems that would exacerbate the state\’s 8.5 percent unemployment rate.

\”I think we underestimate the impact of sequestration if we just look at the jobs in the defense industry and the service-providing industries,\’\’ Rathgeber told reporters. \”I think the real impact here is in the unwillingness of the private sector to invest in a climate where they don\’t know what the rules are going forward. … If we come to the table in an opportunity to compromise, I think we can unlock private-sector investment. We can get our economy moving forward.\’\’

Following the fiscal cliff that reached a near-crisis level between Christmas and New Year\’s Day, Rathgeber said, \”It is definitely the second whammy in a very short period of time.\’\’

U.S. Rep. Elizabeth Esty of Cheshire cited a study by George Mason University that said there could be 42,000 lost jobs if sequestration is fully implemented in Connecticut.

\”It is just irresponsible, and we need to get people to the table,\’\’ Esty said in Hartford.

Blumenthal rejected the notion – as discussed widely in the national debate on CNN and other stations – that the impact represents only 3 percent of the economy.

 \”It\’s way more than 3 or 4 percent,\’\’ Blumenthal said. \”It may look like 3 percent if you\’re calculating it on an annual basis, but there are only seven months left in the fiscal year. For the Department of Defense, it\’s more like about 10 percent. The problem with the cuts is they are completely inflexible. They are across the board. Any businessman who is told, you need to cut every division, every part of your business by 10 percent would say, \’That\’s crazy.\’ \’\’

The cuts could particularly hurt Connecticut because of the nature of the economy and the workforce.

\”If we lose them, we lose what makes Connecticut great,\’\’ Blumenthal said. \”We don\’t have oil wells. We don\’t have the Grand Canyon. We don\’t have gold mines. We have really skilled people who work at places like Electric Boat or Pratt and Whitney. If they are put out of a job, they will go elsewhere. We will lose that resource.\’\’

The Congressional delegation, interviewed by Daniela Altimari and Jenny Wilson, had the following reactions:

\”If you look at the fiscal cliff, a deal got put together in about 36 hours once Biden and McConnell started talking to each other,\’\’ said Democrat Joe Courtney. \”There\’s no question that it\’s possible that something could move between now and Friday. But it does seem that, looking at the schedule that Boehner\’s put out for the week and just the posturing right now, it\’s not ripe for things to come together that quickly.\”
Regarding the cuts, Courtney said, \”It doesn\’t happen all on one day at one time. So for example, in Groton, they\’re talking about cancelling a repair job for the USS Providence, but that wasn\’t really slated to come in until the end of the fiscal year, so it\’s not like layoff notices will go out tomorrow because of the Providence being cancelled. But I was down there with the metal trades council this past week, and they were getting such good momentum in terms of hiring and now it just kind of puts a cloud over everything.
\”That\’s one example. I was at a Head Start program where they were talking about 40 slots would be eliminated for kids who are already in the program. So this isn\’t like adding to the waiting list.

He added, \”The latest conventional wisdom is, well, we can do it later in the month, March 27 is the next trip wire with the CR (continuing resolution) running out, but the problem is, if you\’re running an agency, you really don\’t have the luxury of assuming that cooler heads are going to prevail. You\’re going to have to start making some moves. … That\’s where I think the ripple effect for services is going to start being pretty widespread.\”
When asked the possibility of a deal, he said \”the pieces are there.\”
U.S. Rep. Rosa DeLauro of New Haven said, \”It doesn\’t have to happen. If people would be reasonable, we could end this. The President has made a proposal in a balanced way of what we can do by way of spending cuts and what we can do with regard to putting more revenue on the table, but our colleagues on the other side of the aisle don\’t seem to want to move in that direction. They seem to want to prove a point, which is only disastrous for the American people.\”
Concerning other cuts, DeLauro said, \”The loss of jobs, the loss of research grants for illness and disease through the NIH, almost 600,00 women may be jettisoned from the WIC program, cuts in Title 1.\”

U.S. Rep. Jim Himes said:
\”People are going to feel the sequester cuts in a variety of different ways. Almost all government services … are going to have to scale back their budgets. What that means on the ground is it means fewer TSA people in airports, delays probably as people try to travel, unemployment checks will be lower in amount than they otherwise would have been. It means some of our defense contractors are going to have to rethink their production schedules and potentially furlough some workers.
He continued, \”Basically anything that the federal government touches … is not going to go away, but will be scaled back in a way that will create some unemployment, create some uncertainty, create some hassles for the people of Connecticut and the American people generally. I think it’s going to be felt starting in early March. And again, it’s not a government shutdown. It\’s not going to be quite that dramatic, but perversely it will be felt quickly and hopefully enough so that the leadership in Congress and the leadership in the White House feels intensely the need to come together and do a deal. This is all happening because Congress and the President and the leadership generally have failed to get a deal done around our fiscal challenges, which is infuriating to me because we know more or less what that deal looks like, you know, Simpson Bowles , Rivlin Domenici—there’s been all sorts of plans out there. Plus or minus five percent, that’s the plan and yet the politics have intervened and so we find ourselves creating not just hassles for the American people but a really negative economic occurrence at a time when our economy can’t afford it because that deal has not been done.\’\’

Himes added, \”I wouldn’t rule out a last minute deal. I wouldn’t rule it out. But you know in my four years in Congress and certainly the last two years what I’ve learned is deals don’t get done until there is a feeling of crisis. My hope is—and in any responsible government—we would get this deal done before the first of March. So it’s still possible, but I fear that we are going to really need to see and feel some pain to get the leadership to do the deal that we can all support.
Esty said:

\”It’s not looking very promising to get something done before Friday. I’ve already made plans to stay through the weekend and through next week, you know, the following week, because this is really important. If you look at the estimate of jobs, potential job losses in Connecticut, George Mason University estimated 42,000 jobs potentially lost in this state, this is a very serious matter, and these are jobs in families all across the  state. You’re talking about teachers in Head Start positions, you\’re talking about national guards, you’re talking about FAA air traffic controllers.
\”This is really all across the state. It\’s a very serious matter, and we need to get the deficit under control, but it should not be done in the way that when we have a fragile recovery more people are thrown out of work. It’s just the wrong approach.
\”This is a point at which the Republicans in the House really have to decide whether they’re going to sit down and talk with the President about doing something and unfortunately a number of them are saying bring it on – we can take these cuts, we have too much spending. But..thinking about the magnitude on people’s lives, what that means, it’s totally the wrong way. Across the board cuts are never the right approach. Ever. And I’m strongly in favor of a balanced approach, that’s what we need to do, that’s what the public voted for in this election.
Esty concluded, \”The frustration is that we were sent home last week without addressing this. We should have been in Washington last week. People should have been meeting, people should have been putting a bunch of proposals on the table and putting out a deal. That’s what we were sent here to do.”

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19 thoughts on “Sequestration Could Lead To Job Cuts In Connecticut At Defense Contractors

  1. Richard

    Ignore those aging old drama queens on Capitol Hill. Their drama isn’t fit for public consumption. When they cried wolf last year and cratered it was over.

  2. sam

    “If we lose them, we lose what makes Connecticut great,” Blumenthal said
    Senator Blumenthal in case you havent noticed, we have already lost what made Ct great. Where have you been while it has been slipping away? There is no more real manufacturing in this state any more. What is left is floundering. Our politicians have chased most of the Good jobs away with all their damn high taxes. Our state is becoming a welfare haven and a go to place for as they call them now “undocumented” immigrants. They used to be considered “Ilegal” until someone figured out that the so called undocumented were a huge voting base that hadnt been tapped. If these politicians would worry more about our states economic future and less about who is going to vote for them in the next election we might not be in the ecomonic mess we are in. Both in this state and the country as a whole. Seems like everytime you see these politicians on the news they are grandstanding for media attention and votes. The great “anti gun” band wagon of the last 2 months is a great example of that. Maybe They should let the sequester happen and let nature take its course and see what happens. Wall street doesnt seem to be worried. maybe the sky really isnt falling, maybe its just raining a little.

    1. Forst Era Trooper

      Semper Lie Blumenthal is a limousine liberal and we are still waiting for him to answer the “How do you create a Job?” question he was asked. Murphy is in way over his head and exists only because the National party forced a McMahon run over a Rob Simmons one. We can only pray Simmons runs in 2016 or 2018.

    2. Mike Robinson

      Sam – Chased most of the good jobs away? Not true for defense jobs. In 2011, the state received nearly $12.7 billion in Department of Defense and Department of Homeland Security contracts, a 51 percent increase to the state since 2003. Defense and Homeland Security contracting is responsible for a total of more than 101,000 jobs and a total payroll of more than $7.9 billion across the state. England Defense Study_06_20_12.pdf

      Meanwhile, the gun industry is almost inconsequential by comparison with just 2,000 jobs in Connecticut, and some of these gun jobs are also defense jobs. Cuts to defense spending are a huge threat to Connecticut.

      1. Connecticut is Dying Too

        Mike, plesse explain why Connecticut has had essentially flat job growth for the last 20 years despite all the defense contract growth you indicate above. Look at the job data and you’ll conclude we’ve been stagnant at best.

        Its interesting to note that the state of Connecticut remains Connecticut’s largest employer. That speaks volumes about who we are.

  3. Connecticut is Dying Too

    Try again Democrats. You got $600B in tax increases a few months ago and promised the country you’d start working on the spending cuts. So, where are they? Is it more important to score political points than it is to put a dent in our out-of-control federal spending?

    A workable alternative is to take the restrictions off where the sequestration cuts come from. After all, they represent only 2.5% of total federal spending in FY13. Even a liberal should be able to figure out how to cut 2.5% out of a budget. All sequestration does is slow the rate of growth in our spending addiction by $1.2T over 10 years. Lets get real.

    Folks, we are on an unsustainable fiscal and monetary path. The Fed and the Treasury play sleight of hand with our ever-increasing Federal debt. The Treasury sells bonds to fund the $1T + deficits and the Federal Reserve buys half or more of the debt in the name of quantitative easing. We have made entitlement promises in the tens of trillions we cannot possibly keep. We are on the cusp of yet another major entitlement called Obamacare that will make our fiscal situation even worse. And to compound it, we have people in Washington who refuse to lead and to deal with our problems head-on.

    If we don’t get a handle on our problems soon the next economic meltdown will make 2008 look like a picnic. With Obama “in charge,” our prospects don’t look too good.

    1. Jack

      Absoluteley correct.

      Let me put it in #s the average man can understand.

      You make $30k/yr gross. You spend every dime of it. To contiunue to live they way you ‘are accustomed to’ in the past you opened up 7 credit cards for $210k, 7 years worth of gross income. You only pay the interest on the cards and never reduce the principal. This is your country. The nat’l debt is $16.5 trillion and growing by the second. It collects $2.4 trillion in taxes in a year. IT HAS 7 YEARS WORTH OF TAX REVENUE SITTING OUT THERE AS DEBT AND DOESN’T PAY DOWN THE PRINCIPAL, AND SPENDS MORE EVERY YEAR.

      Someone asks you to only spend 98% of the $30K and you tell them the sky is going to fall in. You blame the person who tells you that you are out of control. THAT IS THE TEXT IN THIS ARTICLE. WAKE UP AMERICA !

  4. Government Employee Fed

    The Obama propraganda machine is in high activity. It’s like the old Tolland Board of Education –no pens, no paper, no football, no sports, anything for the students will be cut. That’s the Obama approach. No point of compromising when he can use his 2 percent “mandate” from the Electoral College (not the people). Obama is trying to push the USA over and invisible cliff, thinking this will make him, what he’ll never be, a great president. Federal employees are familiar with this tactic–and we always get paid in the end. Federal employees in many areas need to be reduced. More so do the contractors hanging on with the Federal Government at outrageous salaries, no one talks about them.

  5. sam

    Esty concluded, “The frustration is that we were sent home last week without addressing this. We should have been in Washington last week. People should have been meeting, people should have been putting a bunch of proposals on the table and putting out a deal. That’s what we were sent here to do.”

    Wow imagine that!
    Instead here in Ct our politicians were grandstanding for the “anti gun” groups and making sure they got their names in the news. They were more worried about finding ways to penalize “legal gun owners” than worrying about our stagnent declining economy or this “sequester” like they should have been. But hey its politics our politicians have to stump for those votes because that is what politics its all about today. You have to make sure get re elected so you get those good paying jobs with greats perks and amazing benefits and retirements.

  6. Kenny

    Yeah, and they can lose Stag Ruger, Colt, Cabelas and many mnore with the dracoinian gun BS. Those comapnies have all said they will leave and I hope they do if these idiots continue and I will be right behind them. Then they can try taxing all the welfare and illegals for the lost revenue.

    1. Mike Robinson

      Kenny, please show me where these companies said that. Why would a company leave over these laws? They could still manufacture here even if sales were banned here.

      1. Connecticut is Dying Too

        Lets say you have a business in Connecticut and the state passes a law which outlaws your product in the state. Would that make you feel like a welcome partner in commerce in Connecticut? Would that make you want to invest in the state which refuses your business?

        Wake up Mike. Seriously.

        1. Mike Robinson

          Seriously. I’m awake. Are you awake? Over the years Connecticut has enacted some of the toughest gun laws in the country. They did not leave. For example, we already have an assault weapons sales ban but they are still made here today. Much as you would like to believe that gun sales law is “super important” they decide on business reasons, not gun-love emotions.

          1. Connecticut is Dying Too

            Okay Mike. Whatever you say. Ignore the giant sucking sound of businesses and taxpayers leaving this tax and spend liberal utopia. Good luck paying for the ever-growing state workers and entitlement class. Enjoy buddy.

          2. Connecticut is Dying Too

            PS Mike. If we already have among the strictist gun laws in the country, what will the AWB law do to stem gun violence in this state? Answer: NOTHING. People in the cities kill each other every day in this state with ILLEGAL handguns. Its just another feel good but do-nothing “progressive” failure.

          3. Mike Robinson

            Fine, if you say so, Dying Man. Why do you think I have to pay for the state workers? I can also leave the state. Right now we are both still here. So you are also paying for the state workers. Anyone who lived here in 2012 has to pay taxes this year. People living here now, like you, pay taxes next year too. Enjoy!

          4. Connecticut is Dying Too

            I shall “enjoy” until I am able to leave this tax and spend ponzi scheme liberal infested sad excuse for a Commonwealth known as Connecticut. Until then, I will bend over and pay for all the bad decisions made by the village idiots in Hartford.

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