Senators From Defense Industry States Urge US Armaments Sales

AN effort to increase United States arms exports might not seem politically correct, given today's new world order. But a couple of Senate Democrats are proposing to do just that - by allowing the US government to provide loan guarantees for friendly countries that want to buy direct from American weapons makers.

The home state of the senators in question explains the motivation for the proposal. They're Sens. Christopher Dodd and Joseph Lieberman of Connecticut, a state hit hard by defense cutbacks. Their loan-guarantee idea is just one of many now circulating in a Congress worried about how to cushion the blow for communities affected by defense cuts.

Considering the scope of the problem and the complexity of trying to find a solution, it's not clear whether Congress will finally agree on a defense conversion package. But the push of local politics in an election year means legislators will certainly give it a try.

"The sanitary term for what's happening is 'dislocation.' The real term is 'pain,' " says an aide to a senator whose state is also losing defense jobs.

Nobody has hard figures on how defense-related employment will be affected by the Pentagon build-down. The congressional Office of Technology Assessment estimates as many as 2.5 million of the current 6 million defense jobs could disappear by the turn of the century. But defense dislocation is already a problem in states from Connecticut, where General Dynamics says it will lay off 4,000 Electric Boat employees if the proposed cancellation of the Seawolf submarine takes effect, to California, where limit s on B-2 bomber production will affect thousands of Northrup Corporation workers.

The House's budget resolution for fiscal year 1993, passed by the chamber earlier this month, earmarks $1 billion of the Pentagon budget and $2 billion of other spending for economic conversion. If Congress votes to tear down the "walls" in the 1993 budget and allow direct shifts of defense funds to domestic spending, the budget resolution recommends even more non-defense spending: up to $6.6 billion.

The budget resolution doesn't parcel out this money line item-by-line item. For the use of the non-Pentagon funds, it recommends general increases for "research, small business, community development, education and job training programs," according to House budget documents.

Existing programs that could benefit include the Economic Development Administration, which helps communities in economic downturn, and general public- works projects, such as highway construction, which provide large numbers of jobs. For money taken from the Department of Defense budget it suggests, among other things, an increase in "dual use" research and development - R&D that has commercial as well as military applications.

By the end of this month an industrial base panel of the House Armed Services Committee is scheduled to produce specific defense conversion recommendations. In a recent speech, the chairman of the panel, Rep. Dave McCurdy (D) of Oklahoma, suggested that, among other things, the Pentagon could:

* Accelerate development of such dual-use technologies as the V-22 tilt-rotor aircraft.

* Allocate an additional $250 million to the Defense Advanced Research Projects Agency for work in "high-payoff" areas such as super computers, ceramics, and electronic materials.

* Double the money for the Small Business Innovative Research program, which sets aside a certain amount of Pentagon funds for small firms with creative R&D ideas.

In the Senate, a special Democratic task force on conversion has been appointed by Majority Leader Sen. George Mitchell (D) of Maine, with a report target date of June 1.

The panel has come to no conclusions yet. "We're at the gnashing-of-teeth and rending-of-garments stage," says a Senate aide.

Senator Lieberman of Connecticut, with Senator Dodd as co-sponsor, has introduced extensive defense conversion legislation.

Besides the export guarantees for commercial US arms sales, the bill would establish a Presidential Council on Economic Diversification and Adjustment. It would allow defense firms tax-free treatment on profits used to retrain workers for civilian tasks and force arms manufacturers to give employees 90-day notice of impending layoffs. A problem with these and many other conversion ideas is that they smack of government-ordered industrial policy, something the US has to this point shied away from. Indeed,

the Bush administration opposes most defense conversion moves on these grounds.

Gordon Adams, head of the Defense Budget Project, cautions: "Our problem is how to have a healthy, growing economy, not how to transition defense workers."