Report On Defense Sequestration Finds Big Jobs Impact In Swing States

A statistical analysis of how defense sequestration would impact employment in each of the 50 states finds that several “swing” states crucial to President Obama’s reelection prospects would be hit especially hard. Specifically, four of the ten states losing the most defense jobs if sequestration is triggered — Florida, North Carolina, Pennsylvania and Virginia — could prove pivotal in the November election. President Obama won each of the four states by five percent or less of the vote in his 2008 presidential bid, so a modest shift in voter sentiment could doom his reelection prospects.

The jobs impact of defense sequestration is laid out in a report entitled Defense Spending Cuts: The Impact on Economic Activity and Jobs released last week by the National Association of Manufacturers. Using a rigorous modeling tool, it estimates what would happen to employment if the sequestration provisions in the 2011 Budget Control Act were triggered as currently planned on January 2. The report calculates that in combination with earlier cuts already being implemented under the same law, defense sequestration would reduce gross domestic product by 0.6% and national employment by 907,000 jobs in fiscal 2013. The impact would worsen the following year, with 1,211,000 jobs wiped out in a wide range of industries scattered across all 50 states. GDP would be reduced 0.8% in 2014, the peak year for economic fallout from the sequestration process.

Significant impacts would occur in following years too, but for an administration facing weak economic conditions in its reelection bid, the near-term consequences are likely to prove more compelling. The swing-state impact of defense sequestration is especially salient to electoral outcomes. Not surprisingly, the most populous states are near the top of the rankings for job losses from sequestration. But in second place with an estimated 87,000 jobs destroyed in 2013 from sequestration is Virginia, a state in which military spending has long played a central economic role. Democrats carried Virginia in 2008 for the first time since Lyndon Johnson bested Barry Goldwater in the 1964 presidential race, but Mr. Obama’s vote margin was a mere 52.7% to Senator John McCain’s 46.4%, meaning that a shift to the Republican side of only one in 20 voters in 2012 could deliver all the Old Dominion’s electoral-college votes to Mitt Romney.

The situation is even closer in Florida, the state projected to lose the fourth largest number of jobs under sequestration. There, Obama won in 2008 with only 50.7% of the vote to McCain’s 48.8%. And in North Carolina, the other Southeastern swing state likely to lose a lot of defense jobs from sequestration, Obama beat McCain in 2008 by 49.9% to 49.5% — a razor-thin victory margin that could easily be wiped out the next time around by modest shifts in voter sentiment. Obama is in better shape in the one other swing state likely to lose big from sequestration, Pennsylvania, because his margin of victory there in the last presidential match-up was 54.7% to McCain’s 44.3%. The model finds that Pennsylvania and North Carolina would both lose about 26,000 jobs as a result of sequestration in 2013.

The Obama camp has developed several electoral scenarios in which it might be able to win in November without Florida or North Carolina or Virginia. However, nobody seriously believes the president could be reelected without Pennsylvania in his column, and Florida or Virginia could prove crucial if other swing states like Ohio decide to go with the GOP in 2012. Obama only got 51.2% of the vote in the Buckeye State in 2008, so the projected loss of 21,000 jobs there from sequestration in 2013 could threaten his reelection prospects. The simple truth is that Obama lacks many of the electoral advantages he had last time around, so obscure issues like sequestration of the military budget could be decisive in a tight November race. That argues for doing something now to avert sequestration, rather than waiting for action by a lame-duck session of Congress after the election.