PENTAGON PANEL HAS HARSH WORDS FOR DEFENSE-CUT COPING PROGRAMS

                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: THURSDAY, January 7, 1993                   TAG: 9301070060
SECTION: BUSINESS                    PAGE: B-5   EDITION: METRO   
SOURCE: Associated Press
DATELINE: WASHINGTON                                LENGTH: Medium
PENTAGON PANEL HAS HARSH WORDS FOR DEFENSE-CUT COPING PROGRAMS
Americans are suffering far less from defense spending cuts caused by the end of the Cold War than they did from cuts after the Korean or Vietnam wars, the government reported Wednesday.
In fact, the Pentagon's Defense Conversion Commission found that the current round of defense cuts, begun in 1986, "is the mildest and most gradual" of the past 50 years.
But the panel's 85-page report sharply criticized the government's programs to help Americans cope with defense spending cuts.
"The commission strongly feels that the current government dislocation-assistance programs are fragmented and do not place enough emphasis on meeting the needs of communities and individuals," the panel said.
It recommended better integration of programs to help those laid off - a sort of "one-stop shopping" approach that would combine federal aid programs under one roof to which local communities could apply for help.
The commission was established in April by Congress to assess the effects of defense spending cuts and recommend how to deal with them.
Defense spending is expected to decline to $237 billion in 1997, a 30 percent drop from 1987, resulting in the loss of 960,000 private-sector jobs and a 25-percent cut in the number of active duty military personnel, the panel said.
The impact "may be substantial in regions where the local economy depends heavily on defense spending," the report concluded. "However, at the overall national level, the impact . . . is actually smaller than after the Korean War and Vietnam."
The spending cuts are less severe than after World War II, Korea and Vietnam, and are taking place over a longer period, the commission found.
For example, defense spending as a percentage of the country's gross domestic product dropped an average of 8.9 percent annually after World War II - but only 0.26 percent since the current round of cuts began, the report said.
Analysts interviewed by the commission also concluded that the cuts contributed less to the recession of the past two years than did those after previous wars to earlier recessions.
Although defense cuts contributed somewhat to the recession, the commission found that defense-related manufacturing as a whole accounted for just 9 percent of manufacturing employment in 1990.
The panel found that the effects of defense cuts were the most serious in 10 states, based on the percentage of private-sector jobs expected to be lost from 1991 to 1997:
California, 19 percent; New York, 6 percent; Texas, 6 percent; Virginia, 5 percent; Massachusetts, 5 percent; Pennsylvania, Ohio, Florida and Connecticut, 4 percent; and New Jersey, 3 percent.
But in most communities, the panel found, defense-related jobs account for less than 3 percent of local employment.
In general, the report concluded that a strong economy was the best way to ease the pain of defense cuts. It also found that the economy could be improved by redirecting money cut from defense into investment rather than consumption.

by Bhavesh Jinadra by CNB