Southern California aerospace and defense contractors expecting boost from Trump budget
Southern California's defense industry, long the epicenter for high-flying aerospace technology and advanced weapons for the military, could get a major windfall under President Trump’s proposed new budget.
But the expected spending boom would come at the cost of billions of dollars in federal support for California’s farmers, earthquake preparation, environmental protection, affordable housing, job training, and other critical institutions and services.
The White House request to Congress to boost defense spending by $30 billion over the next six months — and $54 billion more next year — would flush federal dollars to hundreds of Pentagon contractors from Santa Barbara to San Diego that manufacture parts or provide engineering support for big-ticket military programs, experts say.
Nearly half the money for this fiscal year would help purchase sophisticated fighter jets and drones, new warships and advanced missiles, many of which are designed and built in Southern California.
Trump’s blueprint faces stiff resistance from Democrats and some Republicans in Congress, and is all but certain to be rewritten before it is approved. But the proposal clearly signals larger defense budgets after several years of cuts and flat lines.
The Trump administration will try to convince lawmakers that the war against Islamic State, the battle against the Taliban in Afghanistan, and growing global security concerns will require vastly larger budgets each year for defense, homeland security and veterans.
“I have proposed a budget that calls for one of the largest increases in defense spending history,” Trump told a campaign-style rally Monday in Louisville, Ky. “We need it. [We’ve] got a lot of bad actors out there, folks.”
“It's also jobs,” he added, “because we're going to make this equipment right here in the U.S.A.”
Trump has argued that 16 years of war has created a dire need to replace or upgrade aircraft, weapons systems and other worn equipment. Critics contend that the Pentagon helped create the problem by replacing older systems with highly sophisticated, complicated armaments that in some cases cost three times more.
To help pay for the new hardware, the White House has proposed cutting most federal departments by about 10% to 12% next year, and to shift much of the burden for crucial services to states and county governments.
California already is projected to face a $1.6-billion deficit next fiscal year — and federal dollars make up about a third of the state budget. That doesn’t include the Community Development Block Grants that go to cities and counties, which would be eliminated under the Trump plan.
If the cuts are enacted, police forces would be reduced, schools would face layoffs and major initiatives for the poor — such as the In-Home Supportive Services program, which provides care for the elderly and disabled, and the CalFresh food stamp program, which serves needy residents — could be scaled back dramatically.
Federal housing programs that underpin a plan approved by Los Angeles voters to battle the homelessness epidemic would be vastly reduced. The ability to respond to earthquakes and forest fires would be diminished, and college students struggling to pay tuition would get less help.
“President Trump has shown that he does not value the future of our children and working families,” Rep. Nancy Pelosi (D-San Francisco), the minority leader in the House, said about the proposed budget. “It fails to recognize that the health of America, the strength of America, does not just depend on our military.”
California economic advocates and budget analysts say it’s difficult to find an industry in the state outside of defense that would benefit from the proposed federal budget.
“Surely, a number of the programs slated for elimination or severe cuts can — and ought to — be improved, but let’s not put America’s economic future at stake by essentially liquidating them,” said Bill Allen, chief executive of the Los Angeles County Economic Development Corp.
“Placing restrictive policies on immigration and trade does not help the state of California in any way,” said Steve Levy, director of the Center for Continuing Study of the California Economy in Palo Alto. “Overall, this budget will negatively impact the economy with few exceptions.”
On the plus side, the budget could revive highly skilled engineering and manufacturing jobs in the Southland, which has been left reeling by waves of layoffs since the Cold War ended and across-the-board spending cuts that were part of a 2011 budget deal with Congress.
Aerospace-related jobs in Southern California fell from 273,000 in 1990 to 92,000 today, according to the Los Angeles County Economic Development Corp.'s latest numbers on the industry.
If approved by Congress, the Pentagon would fulfill a wish list that includes 24 F/A-18 fighter jets for $2.32 billion; five F-35 fighter jets for $596 million; and 13 MQ-1 Gray Eagle drones for $130 million.
Parts for the F-35 stealth fighter involve 240 major defense companies and smaller mom-and-pop suppliers in California, more than any state.
Several hundred Northrop Grumman Corp. workers build the F-35 fuselages in Palmdale, although final assembly is in Texas.
Northrop builds fuselage sections for the Navy's F/A-18 fighter jet in its El Segundo facility on Aviation Boulevard, and General Atomics Aeronautical Systems Inc. builds Gray Eagle drones in Poway.
“Additional defense spending means more work for assembly lines, local machine shops and structural manufacturers,” said Jim Adams, an aerospace analyst with PricewaterhouseCoopers, which tracks the defense industry for the Los Angeles County Economic Development Corp.
“Nothing is promised at this point, but it looks like there will be some stability in the industry,” he said.
Defense hawks in the Republican Party, led by Sen. John McCain of Arizona, chairman of the Senate Armed Services Committee, and Rep. Mac Thornberry of Texas, chairman of the House Armed Services Committee, are pushing for an even larger defense budget.
“Unfortunately, the administration’s budget request is not enough to repair the damage and to rebuild the military,” Thornberry said after the White House released its plan.
On Wednesday, the administration lobbied Congress to appropriate $30 billion more for the military for the last six months of the fiscal year, partly to help pay for the wars in Iraq, Syria and Afghanistan.
The money would help “get our aircraft back in the air, our ships back to sea and our troops back in the field with refurbished or new equipment and proper training,” Defense Secretary James N. Mattis told the Senate Appropriations Committee.
Sen. Jack Reed (D-R.I.) complained that the administration has said it would cut $18 billion from non-defense programs to help offset the request, but hasn’t said which programs would be targeted.
“With $18 billion in unspecified cuts to the domestic side of the ledger, how can we make a decision if we don't know what the specific cuts will be?” Reed said. “That's something that we would have to know before we could thoughtfully make a judgment.”
To appropriate the $30 billion, Congress would need to lift the so-called sequestrationspending caps that were imposed in 2011 as part of a budget agreement.
The Senate would need a 60-vote super-majority for approval, meaning eight Democrats would have to break ranks.
Loren Thompson, a defense policy analyst at the Lexington Institute in Arlington, Va., said the White House would find it difficult to find eight Senate Democrats willing to lift the budget cap on the Pentagon given all the domestic cuts the White House is proposing.
“President Trump's proposed defense increases would generate billions of dollars of weapons spending in Southern California, but trading off domestic priorities for more defense may make it impossible to find the necessary 60-vote super-majority,” he said.
Rep. Chris Stewart (R-Utah), a former Air Force pilot, said the supplemental spending request was not yet a priority in Congress, which has been tied up with investigating the Trump campaign’s links with Russia and writing a healthcare bill to replace Obamacare.
“It's being overwhelmed right now,” Stewart said. “It's one step at a time.”