September 23, 2012

'Bad policy' cuts would impact Maine sites

By Kevin Miller
Staff Writer

WASHINGTON -- They've been called devastating, disastrous and, most recently, labeled by the White House as "bad policy" that was never intended to be implemented.

But with the political world focused on the upcoming elections, little is being done in Washington, D.C., to avert the first round of massive federal spending cuts that could affect thousands of jobs in Maine and millions more across the country.

The inaction and uncertainty has turned the cuts into fodder for political campaigns, including in Maine.

The White House released a report Sept. 14 on how the Obama administration would implement the across-the-board budget cuts -- known as "sequestration" -- if Democrats and Republicans failed to figure out a compromise before year's end on reducing the federal deficit. Congress left Washington this week and is not slated to return until after the November elections.

The White House report does not list individual programs or contracts, providing instead a large-scale view of the potential cuts. But even the general figures offer a sense of the scope of the reductions in areas of the federal budget important to Maine.

In fiscal year 2013, those nationwide cuts would include:

* A $2.1 billion reduction in Navy shipbuilding and conversion, a budget item that directly supports more than 5,000 jobs at Bath Iron Works, 4,700 civilians at the Portsmouth Naval Shipyard in Kittery and thousands more indirectly.

* A $285 million reduction in the Low Income Home Energy Assistance Program, or LIHEAP, which Maine and other New England states depend on to help poorer residents heat their homes.

* A $712 million reduction in U.S. Customs and Border Protection, which would affect jobs along Maine's border with Canada.

* A nearly $400 million reduction in non-defense budgets in the Coast Guard, which has operations in South Portland, Southwest Harbor and other Maine ports.

* A $148 million reduction in energy-efficiency and renewable-energy programs.

The threat of indiscriminate, across-the-board cuts was supposed to provide Congress (and the White House) with the incentive to come up with an alternate plan for addressing the deficit. But a "supercommittee" failed to reach a compromise and Congress has yet to act, although leaders on both sides of the aisle have suggested that steps will be taken before January.

U.S. Sen. Olympia Snowe, R-Maine, called the situation yet another example of partisan gridlock and said the Navy cuts in particular could have serious consequences for Maine.

"Cuts of such magnitude would likely force our Navy to eliminate plans to purchase at least one ship or submarine in FY 2013, a decision that would have long-term consequences on our nation's naval capabilities and could harm vital components of our industrial base such as Bath Iron Works and Kittery-Portsmouth Naval Shipyard," Snowe said in a written statement.

Big impact

In July, the CEO of General Dynamics, which operates BIW, warned in a letter to members of Congress that "the uncertainty surrounding the ultimate nature of sequestration is already affecting our investment and hiring activities and this will accelerate as the months pass." Jay Johnson added that the toll this uncertainty would have on General Dynamics employees and suppliers "should not be underestimated."

Last week, General Dynamics spokesman Rob Doolittle said not much had changed since July.

"We really don't have much new information," Doolittle said.

The uncertainty has led to wildly speculative predictions on how many jobs could be lost nationwide and in each state if across-the-board cuts were allowed to kick in.

Earlier this summer, an analysis produced for the Aerospace Industries Association predicted that Maine could lose more than 4,200 defense-related jobs and 3,000 non-defense jobs under sequestration. Nationwide, job losses could top 2 million, according to study author Stephen Fuller of George Mason University.

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