Defense industry awaiting details of Clinton's plans to redirect funds CLINTON'S ECONOMIC PLAN

February 22, 1993|By Richard H. P. Sia | Richard H. P. Sia,Washington Bureau

WASHINGTON -- President Clinton's prescription for "reinvesting" defense savings into high technology lacks enough details to promise swift relief to economically distressed Southern California.

An effort to assemble a high-level task force on "defense conversion," similar to the one developing Mr. Clinton's health care plan has been stalled for weeks, according to several people familiar with the planning.

"They haven't decided anything; they've been overwhelmed," said a consultant to the administration.

Mr. Clinton won strong voter support in California by promising that his administration would not abandon those hurt by his pledge to cut $60 billion in defense funds by 1997. Now, he is likely to be pressed for specifics as he seeks support for his economic revival plan in an area still reeling from deep defense cuts and a prolonged recession.

Many advocates of stronger federal intervention are confident Mr. Clinton will keep his promise but are growing anxious about the slow pace of administration action. Some of them, including Reps. Maxine Waters and Bob Filner, Democrats from Southern California, have scheduled a news conference on Capitol Hill tomorrow to promote steps they think the administration ought to take.

The budget plan Mr. Clinton unveiled last week set aside at least $6 billion over four years for existing federal research and "transition assistance" programs for businesses, communities and displaced workers. But missing from the plan was the sweeping, more aggressive approach Mr. Clinton has advocated restructure the U.S. defense industrial base.

The administration's immediate concern is what to do with $1.6 billion that Congress added to this year's defense budget. The ++ money, the largest amount ever earmarked to help reshape the U.S. defense establishment, has been available for community economic development, labor retraining, technology initiatives and military personnel benefits since last fall.

Yesterday, Mr. Clinton said he will release $500 million of those funds. The money would help companies develop so-called dual-use technology with both military and commercial applications.

Officials at the Pentagon and National Economic Council are scrambling to decide how to allocate the remaining funds by March 15, when they must deliver bad news to the nation about the U.S. military bases they will seek to close.

"I don't think they should wait much longer, because the problem is so big and the amount of money they have now will only make adjustments at the margins," said Erik R. Pages, director of the defense transitions project at the Business Executives for National Security.

Officials in southern Maryland fear that one of the three naval bases in the region may be closed. The Navy is expected to make its recommendation on what base it might close later today.

The task before the administration is daunting. As many as 2.5 million defense-related jobs in private industry, the armed services and the Defense Department may be lost across the country by 2001, the U.S. Office of Technology Assessment (OTA) reported last year.

For some businesses, that will mean layoffs or cuts through attrition, plant closings and sales of subsidiary businesses; for others, it might mean leaving the defense business for good.

The OTA said the impact of the job losses on the national economy would be "minor" -- defense accounts for only 2 percent of the 119 million jobs in the U.S. economy -- but warned of "severe, long lasting local effects" in highly defense-dependent communities.

Maryland, which ranks fifth in the country in the percentage of its work force holding defense-related jobs, may be in a better position than other states to weather the cuts, the agency said. It cited the state's record of steady employment growth, low unemployment rates and other sources of economic strength.

But economic conditions in California -- with more than five times the number of defense-related jobs than Maryland -- are far different.

Mr. Clinton pledged during the campaign to oversee the conversion of the United States from "a defense to an economic giant," proposing reinvesting an average of $12 billion a year from defense savings into an array of economic programs.

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