At this point, it's not clear what impact Mikhail Gorbachev's plan to cut Soviet military forces will have on U.S. defense spending; probably not a lot for the time being. But it is another small cloud on the horizon for Utah's economy, which depends heavily on the military.
Even without Gorbachev's announcement, the era of rapid growth in the Pentagon budget is undoubtedly over because of the urgent need to reduce the federal deficit. One of the most commonly-mentioned places to slash spending is the military. Any perceived relaxation of the Soviet threat will increase such pressure.Several months ago, the National Security Group, a private organization, predicted in a study that defense spending in the next five years will be $250 billion to $400 billion less than what the military had assumed.
All of this is vital to Utah because defense spending plays a significant role in the state's economy. In 1987, Utah ranked fourth among all states in defense expenditures per $1,000 of personal income.
How big is the defense budget in the Utah economy? Consider:
- Hill Air Force Base, Tooele Army Depot, Dugway, and the Defense Depot in Ogden employ about 27,000 people in military and civilian jobs. More than 400 Utah firms have contracts with the Pentagon.
- In 1987, nearly $2 billion in Pentagon money was allocated to Utah.
- In 1977, only 21 Utah industries produced 10 percent or more of their output for defense. By 1985, that figure had more than doubled to 45 local industries with 10 percent of their output for defense.
- In five years, Defense Department contracts with Utah firms have risen from $722 million to nearly $1.7 billion, an increase of 134 percent.
If military spending is drastically reduced in coming years, Utah clearly could suffer. But the picture is not totally bleak. If the U.S., for example, were able to reduce the number of troops in Europe, corresponding to a Soviet withdrawal, the money saved could help reduce the deficit.
But realistically, Utahns need to look ahead and plan for ways to move away from so much military dependence.
That sounds scary, since many consider Pentagon spending in Utah as a kind of security blanket. But communities that have had military facilities close and have successfully replaced them with commercial operations would not go back to the defense-oriented system if they had a choice.
While no serious cutbacks are likely to happen right away, Utahns need to be working on the possibility now, because the lead time involved in shifting away from a military-based economy can be a long one.
State agencies should set aside funds to study diversification. It would be needlessly risky to simply hope that things won't change - risky because of the distinct possibility of getting caught flat-footed when they do.