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Our View: Reach Deficit Reduction Deal

Aug. 5, 2012 - 02:26PM   |  
By THE DEFENSE NEWS STAFF   |   Comments
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Pentagon and defense industry leaders are doing their best to turn up the heat on lawmakers to avoid $500 billion in automatic cuts they say will devastate U.S. national security.

Unless Congress averts sequestration by embracing a broader deficit reduction deal by Jan. 2, the Aerospace Industries Association claims as many as 2 million jobs would be lost.

Defense companies say it’s impossible to gauge how sequestration will play out because there simply are too many variables. Many CEOs say the uncertainty means they will need to start warning employees of potential layoffs in the months leading to the November elections.

Critics say doomsayers are exaggerating, that the impact will be more muted and job losses far smaller.

Administration officials for their part told the House Armed Services Committee last week what sequestration would mean for DoD and the rest of government.

The acting Office of Management and Budget director, Jeffrey Zients, explained that Congress set up sequestration by failing to identify budget savings last year and only Congress can change it.

Deputy Defense Secretary Ashton Carter said DoD doesn’t “want to begin taking actions now to tear ourselves to pieces to prepare for something that’s really stupid.” But he said the impact will be very damaging.

While DoD is not actively planning for sequestration, its contours are becoming apparent. Given that President Obama has waived cuts to military manpower and veterans programs, cuts of 10 percent would hit acquisitions, weapons research, development, training, maintenance, logistics and travel.

These cuts come atop $487 billion slashed from DoD’s 10-year budget by the Budget Control Act.

The same day last week that defense executives rallied against sequestration near the Pentagon, the Labor Department countered CEO claims, saying that companies were not required to issue warnings of potential layoffs since there isn’t enough clarity on whether sequestration will happen.

Sequestration, should it be triggered, may not be the end-of-the-world event — like America defaulting on its debt — portrayed by many politicians and industry leaders, but it would be bad enough that avoiding it ought to be a bipartisan priority.

The crippling effects of sequestration would include added costs of modifying contracts, lost buying power, lowered share values for defense and non-defense companies and higher unemployment, including among veterans. Sequestration also would inflict serious damage to America’s reputation and multinational collaborative programs like the Joint Strike Fighter.

The BCA raised the national debt limit and helped the U.S. avoid its first debt default in 236 years. It identified more than $1 trillion in cuts in government spending over a decade and demanded another $1 trillion be cut — or that amount would be cut automatically from defense and other government spending.

Sequestration was never expected to happen, but it would serve as a draconian threat to force lawmakers into compromise.

Still, some in Congress appear worryingly committed to re-enacting the same protracted drama that freaked capital markets last year into downgrading America’s debt for the first time. Note that the downgrade wasn’t because of more than $14 trillion in debt, but the alarming willingness of some on Capitol Hill not only to let it happen, but to welcome default.

It’s time for Democrats and Republicans to compromise. A group of veteran Republican senators, including South Carolina’s Lindsey Graham and Jon Kyl and John McCain of Arizona, deserve credit for pushing their colleagues for a broader deal that includes revenue increases to avert the so-called fiscal cliff.

The nation’s debt needs to be brought under control, but sequestration isn’t the answer. What’s needed is a comprehensive deal that raises the nation’s debt limit while cutting spending, reforming entitlements and raising revenues.

Whatever plan is adopted can’t be so extreme as to cause other problems, like stalling the economy again or draining future investment. It won’t be easy, but that’s what governing is all about.

Lawmakers have left town for five weeks of vacation and campaigning, but everyone with skin in the sequestration game — that means just about everyone in America — still should pick up the phone or email their Congress members to demand a broad deal to avoid sequestration and tackle the nation’s fiscal mess.

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