There was a dire story on the front page of Sunday’s New York Times datelined Arlington, Va. – the Pentagon’s ‘hood:
“Virginia’s Feast on U.S. Funds Nears an End”
…the headline said. Reporter Trip Gabriel reported from what he called “suburbia grown fat and happy on a federal spending boom in the past decade, primarily military.”
This is sequestration’s Ground Zero, the article said: the looming 20% cut in Pentagon civilians’ pay, and cutbacks in the contracts that their private-sector neighbors depend on, are going to hurt northern Virginia perhaps more than any other part of the country.
Then Stephen S. Fuller of George Mason University declared the post-9/11 state of affairs in northern Virginia “a spending bubble that made this economy grow two percentage points faster than the national economy.”
With a degree in economics, Dr. Fuller knows that such a bubble is unsustainable and ultimately will deflate. But for well over a year, Fuller has been trying to keep the bubble inflated by generating data warning of the hair’s-on-fire impact of sequestration for the Aerospace Industries Association (new motto: Aerospace and Defense: The Strength to Lift America), the lobbying arm of the nation’s biggest military contractors:
October 25, 2011 —
Analysis Projects One Million Jobs at Risk from Defense Cuts
Cuts Would Lower Projected GDP Growth by 25%An economic impact analysis projects more than one million American jobs could be lost as a result of defense budget cuts if the deficit reduction select committee fails to reach agreement on alternative balanced budget solutions and total cuts to defense reach $1 trillion.
Dr. Stephen S. Fuller, Dwight Schar Faculty Chair, University Professor and Director, Center for Regional Analysis at George Mason University and Economic Modeling Specialists Inc. (EMSI) conducted the analysis on behalf of the Aerospace Industries Association. “Our analysis reveals bleak outcomes for both the defense industry and the economy as a whole if the budget sequestration trigger is pulled and $1 trillion is cut from defense,” said Dr. Fuller.
July 17, 2012 —
New Report Predicts Widespread American Job Losses
Government Employees, Teachers, Nurses Among At-Risk WorkersArlington, Va. — A new economic impact analysis concludes that 2.14 million American jobs could be lost if the Budget Control Act’s sequestration mandate takes effect on January 2, 2013. That is the date that budget cuts of $1.2 trillion start throughout government unless Congress and the administration agree on a solution.
Dr. Stephen S. Fuller, Dwight Schar Faculty Chair and University Professor and Director for Regional Analysis at George Mason University, in conjunction with Chmura Economics and Analytics, conducted the study on behalf of the Aerospace Industries Association.
September 20, 2012 —
Sequestration Study: 956,181 Small Business Jobs at Risk
New analysis projects nearly half of 2.14 million sequestration-related job losses to hit small businessArlington, Va. – A new analysis of an economic report concludes that 956,181 small business jobs nationwide are among those at risk under sequestration, a finding that heightens concern about widespread job losses across defense and non-defense employers of all sizes starting in 2013.
The analysis updates a study conducted for the Aerospace Industries Association in July by Dr. Stephen S. Fuller, Dwight Schar Faculty Chair and director for Regional Analysis at George Mason University, in conjunction with Chmura Economics and Analytics.
Searching AIA’s website for “stephen fuller” generates 296 hits, but searching for “fuller+bubble” generates none. Yet he’s not the first to make the subprime-contractor bubble link. The Asahi Shimbun, one of Japan‘s leading newspapers, has also taken note. Japan cares greatly about the U.S. armed forces, given its own puny military and nearby nuclear-armed neighbors like China and North Korea. In an editorial outlining future U.S. military strategy in January 2012, the newspaper warned that the U.S.
…defense budget is so grossly out of proportion to its economic power that one can describe the situation as a military spending bubble.
All bubbles eventually deflate. The question of day is should the nation do it smartly, or simply let it pop?