Editorial: Sequestration Casts a Growing Shadow

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As if the U.S. space industry didn’t have enough to worry about these days, an increasing number of executives are beginning once again to think about the unthinkable: sequestration, a $1.2 trillion, 10-year federal spending cut that would be triggered automatically next year by a failure of Congress to agree on targeted reductions by the end of 2012. The U.S. defense budget would absorb nearly $500 billion of the sequestration cut, this on top of some $500 billion in reductions already imposed by the Budget Control Act of 2011.

The result, by all accounts, would be disaster, not just for space but for the broader U.S. defense and aerospace industry — not to mention the military posture of the United States and its allies. Military space programs in particular would absorb $27 billion of the sequestration cut, affecting critical capabilities including satellite-based communications and missile warning, U.S. Defense Secretary Leon Panetta told lawmakers last November.

Mr. Panetta’s warning came as a bipartisan group of lawmakers was working against a Dec. 23 deadline to come up with the $1.5 trillion budget reduction package mandated by the Budget Control Act, which was signed into law over the summer. The committee’s failure was entirely predictable given Washington’s toxic political climate and the fact that failure brought no immediate consequences — sequestration cuts will not take affect until 2013, and the 2012 U.S. federal budget was structured under the assumption that the automatic reductions will not be triggered.

Unfortunately, Congress and the White House have since given absolutely no indication that they are willing to make the admittedly very difficult decisions needed to get the nation’s finances in order. That, plus the fact that this is an election year —which not only consumes politicians’ time and attention but also tends to counter any bipartisan inclinations — does not inspire confidence that a deal will get done in time to stave off disaster.

Things are challenging enough as it is. Mr. Panetta has made good, at least on the surface, on his assertion that space will continue to be a priority as the Defense Department revamps its force structure and strategy in light of the new fiscal realities and an evolving threat: The major satellite programs of record are preserved in the Pentagon’s 2013 spending request. But conspicuously absent from the request are the kinds of development initiatives that excite and hone the skills of the industry’s most talented engineers. This is partially because the Pentagon’s operational satellite fleet replenishment programs are moving into production at about the same time. But even previously planned block upgrades to these systems are being deferred. The Air Force, for example, has shifted funds previously earmarked for upgrades to its Advanced Extremely High Frequency secure communications satellites next year to other priorities, while abandoning its block upgrade strategy for the next-generation GPS 3 satellite navigation system. The Pentagon also has proposed eliminating a pair of funding accounts used to nurture space-related innovation and technology development: the Operationally Responsive Space Office and the venerable Space Test Program.

There appears to be little in the way of relief forthcoming on the civil-government side, where NASA is being squeezed between a zero-growth budget, ballooning costs on its biggest science project, and a human spaceflight program that’s being pulled in two different directions. Contractors already are reeling from the retirement of the space shuttle, a huge, if expected, development that has driven up the cost of the remaining government launch programs. While a deep-space crew capsule and heavy-lift launcher are being developed, their high cost, along with a lack of consensus about their mission or on NASA’s human spaceflight future, raise questions about their political staying power. Meanwhile, NASA has no new starts in its robotic planetary mission pipeline beyond a Discovery mission currently in the selection phase and has had to defer a number of planned Earth observation satellite projects.

The government’s funding woes are being felt in the commercial space sector as well. While satellite telecommunications remains a relatively bright spot thanks in part to continued military demand and various emerging and rebounding markets, the government’s commitment to the commercial imagery sector appears to be wavering. After signing contracts with two companies that had them invest in next-generation satellites and infrastructure, the government now says it intends to significantly scale back its imagery purchases starting next year. That sets a terrible example for other companies considering investments in space-based capabilities to serve government customers. NASA’s Commercial Crew Program, meanwhile, faces deep skepticism in Congress, which in 2012 funded the program at less than half the level sought by the agency.

Looming over this very tough environment is the specter of sequestration, something nobody wants but nobody — either in the White House or on Capitol Hill — has demonstrated the fortitude to head off. The political parties appear intent on pursuing brinkmanship strategies — as last fall’s standoff over raising the U.S. debt ceiling illustrated all too clearly — confident, not necessarily with justification, in their ability to strike an 11th-hour deal. The problem with political games of chicken is that players can lose control of events, with unpredictable and disastrous results.

Lawmakers have eight-and-a-half months to find a way out that is acceptable to the White House, but if recent past is prologue, the two sides will wait until the last possible moment to address the situation, which by then will have reached the crisis stage. Assuming the November elections bring no sweeping changes to the status quo, the political parties could be expected to try and manipulate the crisis to their own advantage, even at the risk of digging in so deeply they cannot extricate themselves when the clock strikes midnight.

Space industry executives have every right to be worried.