Long on rhetoric, lawmakers are short on aid to military contractors

March 01, 1992|By Richard H.P. Sia | Richard H.P. Sia,Washington Bureau

WASHINGTON THC B — WASHINGTON -- Amid the rush to cut defense spending, House and Senate Democrats have been quick to express concern for the plight of the nation's military contractors and their workers, but slow to explain how they would help them adjust to a new, post-Cold War world.

Only a few proposals have been circulated on Capitol Hill, none ** of which has sparked any widespread enthusiasm. In recent days, top-ranking Democrats have floated several trial balloons unencumbered by details or cost estimates.

"We're talking about nearly 750,000 direct jobs and about 2 million indirect jobs," said Rep. Dave McCurdy, D-Okla., who thinks Congress must act this year to ease the pain of budget cuts and point the defense industry in new directions.

"We can send this economy into a tailspin if we don't think this through," he said.

Congressional aides, industry officials and defense analysts warned in interviews that lawmakers will use a lot of election-year rhetoric to calm worried defense executives and workers, but will find it difficult to agree on a long-term federal policy for the industry.

That could make the Bush administration's avowed market-oriented policy, which will force some companies and their suppliers to fight for survival without much help or encouragement from Washington, ascendant. Some critics of this approach call it "industrial Darwinism."

In recent weeks, Pentagon officials have publicly warned the defense industry not to expect the Pentagon to bail out certain manufacturing sectors if their products are not needed.

But the popular view in Congress, as well as in the industry and affected communities, holds that so many people have become "addicted" to defense spending that Washington must do something to help them deal with the inevitable withdrawal. "We've been on a 40-year high," a Senate aide said.

As Sen. Joseph I. Lieberman, D-Conn., put it recently, "I simply believe the federal government has a compelling obligation to mitigate the economic distress caused directly by its actions."

"It is not in the best national security interest to allow a free fall in the downsizing of our industry," said Bernard L. Schwartz, chairman of Loral Corp., in a speech at the Johns Hopkins University Foreign Policy Institute.

For weeks, several key Democrats have been wrestling over questions that lack easy answers. Among them: Should some of the "peace dividend" go to help defense contractors flourish in the commercial world, even if no such help is given to the auto or steel industries? What aid should the government give towns hurt by defense plant or military base closings? Does it make more sense to focus mainly on retraining defense workers who lose their jobs?

Many of the decisions are riding on the outcome of current debates over election-year tax cuts, economic growth incentives and the "firewall" that now prevents the transfer of defense savings to domestic programs, lawmakers and their aides said. Research agencies, such as the Office of Technology Assessment, have just begun to release their assessments of what defense cuts will mean for many Americans.

"There's a lot of rhetoric out there, a lot of suggestions that may sound great in speeches, but can't necessarily be translated into policy very quickly," said Mr. McCurdy. "We have a lot of conflicting positions out there."

Fueling the debate are business executives, many of whom have called for tax credits and regulatory changes to encourage more ground-breaking but high-risk research and development -- and to make it more profitable. Many also have called for declassifying top-secret "black" technologies that might bolster the economic competitiveness of U.S. firms.

And to offset fewer Pentagon arms purchases, export credits or other forms of financing have been proposed to expand markets for U.S. weapons systems. Such help would reduce unit production costs, save domestic jobs and improve the U.S. trade balance.

Sen. Christopher Dodd, who is seeking re-election this fall, has renewed a failed proposal from last year to have the State Department give out loan guarantees to friendly countries wishing to buy U.S. weaponry. Although roundly criticized by those who want to slow the spread of arms around the world, Mr. Dodd included the proposal in a bill he is promoting to help defense workers, whom he calls "the veterans of the Cold War."

Last month, the liberal Connecticut Democrat, who strenuously hTC objects to the Pentagon's cancellation of the Seawolf attack submarine -- a $2 billion boat built in his state -- even broached the subject of allow ing submarine sales to foreign customers -- a transaction the United States has banned for years to keep its advanced underwater naval technology out of foreign hands.

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