On Fiscal Cliff, Californians Should Worry About Defense, Not Taxes

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News stories on the potential impact of the "fiscal cliff" have focused on how automatic tax increases -- or other tax increases and changes that could be part of an alternative to the automatic increases -- might affect Californians.

But the bigger threat to California and some of its regional economies may come from another bit of the "fiscal cliff" - an automatic $500 billion in defense cuts that are known in Washington DC as "sequestration."

Even after the defense cutbacks at the end of the Cold War, California's economy still depends significantly on defense-related spending. This is particularly true in greater LA and in San Diego.

California Watch has a smart look at the potential impact in San Diego County, where one in four jobs is tied to the military sector. The uncertainty about the cliff cuts -- which would be spread over 10 years -- already seems to be taking a toll on hiring in the sector as companies wait to see what happens.

This sort of uncertainty isn't entirely new for the defense business. Aerospace and defense has always been contract-to-contract work. My late grandmother, a line worker at North American Aviation and its successor companies for more than 30 years, often struggled to find enough hours and work between contracts.

But the size and abrupt nature of these cuts should leave a mark on California. How big a mark? Let's hope we dont find out.

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