Aerospace Execs Give Ground on Defense Cuts as U.S. Nears Fiscal Cliff
WASHINGTON — An aerospace executive said targeted cuts to the U.S. defense budget — perhaps on the order of $50 billion to $150 billion during the next 10 years — must be part of any deal to head off the automatic, across-the-board reductions that will phase in starting Jan. 2 and slash U.S. defense spending by a half-trillion dollars over the next decade unless Congress acts.
“Sequestration at the $500 billion level will shatter our ability to execute the U.S. national security strategy,” David Langstaff, president and chief executive of privately held TASC Inc. of Chantilly, Va., said at a Dec. 3 press briefing at the National Press Club here. “Clearly, it should be less than that. Whether that’s $50 billion or $150 billion, I don’t know.” TASC, spun off from Northrop Grumman in 2009, provides technical and advisory services to such customers as the U.S. Air Force, NASA and the National Reconnaissance Office.
Sequestration refers to across-the-board spending cuts set to take effect next month unless the White House and lawmakers can come up with a deficit reduction deal soon. Although the Pentagon would suffer the deepest cuts, sequestration would also reduce nondefense discretionary spending by 7 to 8 percent. NASA, for example, would lose $1.5 billion in 2013 alone, according to an estimate the White House sent Congress this fall.
Joining Langstaff at the National Press Club Dec. 3 were Wes Bush, president and chief executive of Northrop Grumman, Falls Church, Va.; David Hess, president of Pratt & Whitney, part of United Technologies Corp. of Hartford, Conn.; and Dawne Hickton, president and chief executive of RTI International Metals, Pittsburgh.
The briefing was organized by the Washington-based Aerospace Industries Association (AIA), an industry lobbying group. AIA has been calling on Congress to defuse the sequestration time bomb since lawmakers failed to reach a deal on deficit reduction last year.
All of the executives at the briefing said the method by which defense cuts are meted out mattered more than the exact amount of those cuts. Most objectionable to industry, they said, was the across-the-board nature of the sequester, which would sap money from military programs without discrimination.
“Sequestration … it’s not linked to the strategic plan of the United States defense,” said Hess, the current AIA chairman. “It’s a peanut-butter approach. All programs, regardless of their priority and their linkage with our national defense strategy, get treated separately. It’s an irrational approach.”
While the executives urged Congress not to defer action on the sequestration issue until 2013, Bush and Langstaff acknowledged there may not be enough time left in 2012 for lawmakers to come up with a comprehensive solution.
“We may not get the grand bargain that we’ve all wanted negotiated and approved in the next 28 days,” Langstaff said. “But there’s no reason that the framework for such a deal can’t be reached. Getting that framework will install a lot of confidence in industry.”
“I think there is a pretty common view that we have to get to a framework, but getting the details put together is going to take a little bit of time,” Bush said. “A framework agreement that puts in place the structure by which the details would get worked I think would go a long way to helping us move forward by the end of the year.”
Hickton, whose Pennsylvania-based company fabricates machined titanium that is used widely across the aerospace industrial base, agreed with Bush. RTI’s products, she said, have extremely long lead times, meaning the company cannot invest in more manufacturing capacity or increase its labor force until the sequestration threat is resolved.
“As a publicly traded company, our shareholders don’t want us to wait a year and push this down the road and then make a decision,” Hickton said. “We’re a long lead-time item. That means what we’re manufacturing in our plants today is going on a military program two or three years down the road. If we don’t know what’s happening tomorrow, then we’re not building that plant that takes two years to build.”
The same day AIA held the press briefing, members wrote U.S. President Barack Obama and congressional leaders appealing for relief.
Sequestration is “a recipe for economic stagnation, and the worst possible way to tackle America’s long-term debt,” reads the letter, which was signed by more than 100 aerospace and defense executives. “With the elections behind us, the time for a solution to sequestration has arrived.”