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END OF COLD WAR POSES HARD CHOICES

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Defense cuts coming from the end of the Cold War could pinch Utah's economy hard, where an estimated $1 of every $17 in business revenue comes from defense industries or bases.

But Utah is in better shape than most to absorb those cuts because its economy is relatively strong and its unemployment rate among the nation's lowest. In fact, Utah ranks only 28th in how much defense cuts are expected to hurt it relative to the 50 states, the District of Columbia and Puerto Rico.That's according to a new book evaluating likely impacts of defense cuts on the states.

The book, "Building a Peace Economy: Opportunities and Problems of Post-Cold War Defense Cuts," by Betty G. Lall and John Tepper Marlin of the Council on Economic Priorities, was released Thursday at a Capitol Hill news conference.

Marlin said, "By 1993, defense-related employment in industry may be down by 1 million from its 1987 high. And yet only Connecticut, Maryland and Washington state have attempted comprehensive state plans to cushion the blows."

And the book says Utah has the potential to be hit hard. "The Department of Defense spends almost $2 billion in Utah (a year) - a significant figure for a small state."

It added about half of that goes to defense payrolls in Utah, and about half goes toward prime defense contracts in the state. It said about 103,000 jobs in Utah are defense related.

Such defense spending accounts for 6 percent of the state's total revenue and 4 percent of its civilian work force, the book says.

"This relatively high defense dependence partially offsets the state's low unemployment rate (4.6 percent, ranking fifth lowest in the nation) and increases the state's vulnerability to defense cuts," the book says.

The book's authors figured how much each state will likely suffer relative to others by combining each state's unemployment rate, figures showing its dependence on defense spending and figuring how expected cuts would likely affect its particular defense contractors and bases.

Utah finished about in the middle of the pack, ranked 28th.

It noted the number of prime defense contracts to Utah businesses already declined 30.5 percent between 1987 and 1990, the 16th largest such decrease among the states.

It noted that layoffs and cutbacks have occurred already at Hill Air Force Base - the state's largest employer - and that Fort Douglas has been ordered to close.

The book's authors complain that few cities and states have taken steps to soften the effects of defense cuts and the end of the Cold War.

As a result, they wrote, the nation could miss a "once-in-a-lifetime opportunity to convert our industrial might, along with a major segment of our work force, to the kind of peaceful production that has made Germany and Japan economic models for the world. After winning the Cold War, America is now in danger of permanently becoming a second-rate economy."

They wrote that Missouri, Texas, Arizona, New Hampshire, Vermont, New York, Massachusetts, Ohio, Maryland and California are feeling the strongest economic tremors as successive waves of defense cuts hit their already shaky economies.

They also wrote that the most successful efforts to convert from military to non-military economies have come where aggressive community-level leadership has been combined with federal grants for job training and new business loans.

Marlin said such federal grants will become more necessary "because the likely defense cuts are larger, at least in dollar terms, than after the Korean or Vietnam wars."

He added, "Whereas the post-World War II cuts were described as `re-conversion' because most defense contractors had shifted from making civilian products to assisting in the war effort, today the cuts erode a permanent defense-contracting establishment."

At the book's release, Rep. Sam Gejdenson, D-Conn., repeated his calls for more federal assistance to help defense-dependent areas - such as Connecticut - diversify their economies by halting the "spending of billions to protect the Germans and French from the crumbling Soviet empire, and bring that money home for American workers who are struggling through a deep recession."