DoD explains ‘1.5M jobs at risk’ warning

The Pentagon consulted "a macroeconomic equilibrium representation of the U.S. economy" to estimate the potential consequences of budget cuts.

The Pentagon and defense advocates on the Hill didn’t just pick all these budget-cut warning statistics out of thin air, DoD’s top spokesman said Wednesday.

Press Secretary George Little issued a statement explaining that defense officials went up the road to College Park, Md., to get an official opinion.

Wrote Little:

Here’s the process by which we arrived at the figure of a possible 1% bump in the national employment rate (up to 1.5 million jobs lost) if sequestration occurs.  That figure includes both DoD and defense industrial base jobs.

Working with Interindustry Forecasting at the University of Maryland (INFORUM), DOD examined the effects of possible DoD budget reduction scenarios on U.S. employment for each year over a ten year period (2012-2021).  INFORUM used the Long-Term Interindustry Forecasting Tool (LIFT) model, a 97-sector input-output model embedded within a macroeconomic equilibrium representation of the U.S. economy, to examine the employment effects of budget reductions during this period.  The model included direct and indirect impacts as well as second order effects.  The analysis did not include the effects of Overseas Contingency Operations (OCO) funding since the OCO levels are not known across the sequester timeline.  For the purpose of this analysis, the sequestration process was assumed to result in proportional, across-the-board spending cuts applied to DoD accounts to meet budgetary goals.

See? Science!

DoD, Congress, the defense industry, the White House and almost everyone else in Washington hopes that we’ll never know whether these figures were accurate — ideally, the super committee will make a deal and avoid springing the sequestration mousetrap. And even if the trap does spring, there are plenty of people around town who think Congress can and should act to exempt DoD from sequestration anyway.