Thu April 17, 2014
Pentagon Issues New Sequestration Warnings: $1 Trillion In Cuts By 2021
A report released by the Pentagon this week warns of the consequences of continuing to fund the military at sequestration levels. The across-the-board spending caps have been relieved by a budget deal in Congress, but the Pentagon is saying that by 2021, the Department of Defense will have spent $1 trillion less than it had planned, making cuts in almost all areas including acquisition, research and personnel.
Of course, when the “fiscal cliff” event first happened in January 2013, reports had predicted air traffic control would cease, and there would be no more food inspections; likewise, industries affected by government cutbacks warned of mass layoffs. When the spending limits kicked in—and didn’t pan out to be quite the disaster many had predicted—it became clear that multiple parties may have cried wolf about sequestration.
Contractors who do business with the federal government have been among those with serious concerns about cuts, but as WYSO reported earlier this week, many Dayton-area contractors are surviving, and some are growing and thriving despite a shift in military priorities. Dan Stohr, a spokesman for the the Aerospace Industries Association, admits that industry reps might have misestimated just how bad sequestration would be based on earlier estimates—but he does say the last couple years have been tough on the government-supported parts of the aerospace industry.
“The fact of the matter is that the caps being set where they are, are having a depressing effect on federal spending and contracting writ large,” Stohr says.
And he says that effect trickles down to subcontractors, including many in the Dayton area who are suppliers for Boeing and other aircraft manufacturers. Military aerospace sales went down 6.3 percent in 2013, but that was balanced by increases in commercial sales and exports.
In this week’s report, the Pentagon warns it would take 17 new F-35 fighter jets off its shopping list in the next five years; Lockheed Martin would take a hit from selling less of the expensive planes. The DoD would also place a Combat Rescue Helicopter program on hold until 2019, and slim down the Predator drone program relative to previous plans.
President Barack Obama’s proposed budget for 2015 would bring some relief from sequestration-level caps. It does include some cuts for the military, but maintains and expands programs the DoD says are key to modernization and readiness. The Pentagon is also pushing to get another Base Realignment and Closure (BRAC) process through Congress in 2017, which would allow the DoD to close and reorganize bases to suit current needs.
Maurice McDonald, VP of Aerospace and Defense at the Dayton Development Coalition, says there will always be advocates against cuts or caps of any kind—which can put the DoD between a rock and a hard place in terms of budgeting.
“The DoD has a tough position because they’re being mandated to meet budget cuts, but on the other hand, there are requests for them to continue as much as they can because it impacts the civilian community,” says McDonald. “They’re doing the best they can to put cuts in place that could meet as many goals as possible.”
Regardless of how the cuts pan out for industry, the Pentagon has made clear that it wants to slow the growth of military pay and will seek the support of Congress to do so.
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