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COLUMN LEFT / MAXINE WATERS : Building a New Vision for California : We must give defense firms incentives to change in order to save jobs and neighborhoods.

March 14, 1993|MAXINE WATERS | Rep. Maxine Waters, a Democrat representing Inglewood, Hawthorne, Gardena and parts of Los Angeles, is on the California congressional delegation's Task Force on Reinvestment and Economic Development.

The good news is that the Cold War is over. Billions of dollars we've spent on weapons no longer needed can now be spent building better lives and futures for our people here at home.

The bad news is that beating these swords into plowshares won't be painless. Not by a long shot.

Since 1989, more than 440,000 defense industry workers have lost their jobs. Seventy-five thousand of those were lost in California, and Los Angeles County lost 40,000 high tech, defense-related jobs. The Los Angeles Aerospace Task Force estimates that job losses in the Los Angeles area alone could total 115,000 by 1995 if the current disastrous trends continue.

It isn't just the Northrops and the Rockwells that are hurting. Small-business people also are taking a heavy hit, along with the neighborhoods and communities that depend on their employment and wages.

And there's more to come. President Clinton's economic plan calls for a downsizing in the military budget by $88 billion by 1997, or by $127 billion by 1998. In 1994, the proposed budget calls for $263.7 billion for defense, a reduction of $11.8 billion.

Now is the time to act if we are to preserve the kinds of high-skill, high-wage jobs that can assure America a place in the 21st-Century global marketplace. The irony here, of course, is that many of us who have opposed excessive military spending over the past dozen years are saying, yes, let's not forget the defense workers. Meanwhile, some others, who voted for any and all weapons systems--need and effectiveness be damned--have been reluctant to plan for the inevitable.

Because of the reluctance of past Administrations to plan for military downsizing, we were not ready when the time came and defense firms began laying off workers and started scrambling to compete in civilian markets. Now we are having to play catch-up while thousands of defense workers and their firms pay the price for our lack of vision and vigor.

Last year, Congress appropriated $550 million in the Defense Department budget for economic conversion that went unspent by the Bush Administration.

And, truth be told, some defense contractors are having difficulty understanding the reality of the end of the Cold War and the illogic of continuing a bloated defense budget. They talk about a renewal of hostilities with Saddam Hussein or a nasty nationalist Russia with nukes or our need for peacekeeping around the globe to make the case for continued high defense spending.

I say it's long past time to wake up and smell the coffee. We should have done the planning necessary to convert from a wartime economy to civilian production. Since we didn't, the jobs of millions of defense workers are threatened.

There are a number of pieces in the economic conversion puzzle. Dislocation assistance and training must be available for displaced defense workers. The federal government must be serious about helping communities dependent on defense contracts for local revenues. And companies knee-deep in defense work must be given further incentives to shift production into the civilian market with all possible dispatch.

I have introduced a bill, the Economic Conversion and Diversification Income-Tax Credit Act (HR 1027), that would allow companies with at least 10% of their business in defense work to use a tax credit equal to 15% of their net non-military increase in investment. This means that a company increasing its non-defense investment by $1 million over current spending levels would be eligible for a $150,000 tax credit.

This tax credit is specifically targeted to companies in the defense sector. Unlike the President's proposed permanent tax credit for small businesses--which I support--this credit would be available to larger firms, many of them employers in the Los Angeles area. It would neatly complement the President's proposal to increase dislocated workers' job-training funding by $4.6 billion over the next five years. Most important, it would encourage civilian product expansion for firms traditionally highly dependent on defense contracts.

I want to see companies that formerly churned out tanks competing to produce the light rail cars of the future. I want to see firms that once did research on chemical weapons apply their genius to cleaning up toxic waste dumps.

Before the end of the Cold War, this was a vision shared by too few of us. Now, for America and especially for California, it is an economic and moral necessity.

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