Photo: DVIDS / flickr
Sequestration is coming.The business that came up with the concept of “Mutually Assured Destruction” is now locked in an internal battle to preserve its own existence.
As it stands right now, on January 2, 2013 the Department of defence base budget will take an immense and — for some businesses — catastrophic drop in funding as part of the deal reached after the failure of last year’s supercommittee.
Nobody really wants to see that happen. But to reach a deal, longtime adversaries will have to overcome their differences and work together. Will it work? Find out here.
Here’s how we got to this dire point
The deal reached for the debt ceiling involved a cap to the defence budget, which right now stands at a projected $525 billion for next year.
Since the supercommittee failed, additional automatic cuts to the defence budget will go into effect, unless a new deal can be made. This is called “sequestration.”
It means the defence Department will have to cut another $50 billion for Fiscal Year 2013, bringing the Department of defence budget to $472 billion, close to a 10% additional cut.
That cut could cripple the military, drive defence firms out of business, and would cost hundreds of thousands of jobs across the country.
Photo: Wikimedia Commons
The defence Department just wants enough money to run the military wellThis year, the cuts have already slashed the military budget to a recent low.
Check out what gets cut in the first round of defence cuts here >>
defence Secretary Panetta has gone on record stating how dire the cuts will be, how devastating they will be for the military, and that he’s convinced there is no way that Congress will ever try to actually go through with it.
That message has been reiterated at practically every Pentagon press conference since the original vote last year.
Look to the Pentagon to serve as the fire under Congress to act, releasing increasingly stronger worded warnings and possibly even structuring the cuts in a way that compels congress to act coherently.
Photo: wikipedia commons
House Republicans want to see the defence side of sequester killed right nowThe people on the hill who want to see the cuts go away most of all are easily the House Republicans.
House Armed Services Committee Chairman Buck McKeon, whose district houses many defence contractors working around Palmdale, California, is adamant about the need to make the cuts go away as soon as possible.
McKeon told the Army Times that postponing handling of the issue until after the election is ludicrous, as he doesn’t think that Congress has the “maturity” to handle the cuts at that point.
Another reason the House Republicans want to stop the cuts is that many of the jobs losses in the aerospace and defence sector — jobs in Virginia, North Carolina, Texas, and parts of California — will be removed from Republican or swing districts.
Photo: Lockheed Martin
The defence industry is looking at a massive losses of revenue if any of this goes through, and will fight it to the deathIt seems like the defence industrial complex still fully understands the concept of mutually-assured destruction. They’re not messing around on this one at all.
The military budget comprises, in many cases, the primary source of revenue for these firms.
The aerospace and defence companies that dominate the business — Lockheed Martin has come out in front of the pack — are opposing the planned cuts and fighting tooth and nail to keep the military budget safe.
They’re pressing on Congress to act to stop the cuts, and they’re very well positioned to do so. The defence sector has one of the most active lobbying segments and generous political contributions.
Even more, they’re breaking out the big guns. If cuts go through, there will be across-the-sector layoffs.
They’ve threatened to send out notices of termination right before this November’s election.
That might make Congress move.
Photo: Wikimedia Creative Commons
Senate Republicans are willing to accept tax increases if it means saving the defence budgetThe Senate Armed Services Committee is extremely bipartisan. They have an excellent working relationship across party lines. Look to the Senate Republicans for leadership on how the negotiations will go.
Senator John McCain has gotten to the point where he is willing to raise taxes if it means saving the defence business.
McCain told Bloomberg that he thought a plan to raise revenues could serve as a blueprint to make the necessary money to offset the cuts.
He described the mandatory additional cuts as “so devastating that the Secretary of defence will not even contemplate the plans necessary to implement sequestration,” referring to the fact that the defence Department has remained mum on their planned response.
Photo: dl776webb / flickr
Aerospace and defence industry unions will have to team up with their longtime adversaries, managementWhat’s that old saying about politics and bedfellows?
This is one of those situations where longtime antagonists will have to come together to stop the cuts.
The workers in the aerospace and defence industry arguably have the most to lose of anyone, as sequestration would almost assuredly mean mass layoffs across the sector and many sectors associated with it.
It’s already estimated that the cuts to defence would cause the loss of a million jobs.
So, despite the fact that the machinists just finished striking at Lockheed Martin less than two weeks ago, labour and management will have to team up this time to prevent the cuts from happening. Union members can vote, companies cannot.
Congressional Democrats want to see many of the other cuts go away, and are willing to give on defence
The mistake made when considering the cuts is thinking that it’s something that anybody particularly wants.
Were it up to most of the mainstream factions on the hill, Sequestration wouldn’t happen.
In addition to the massive cuts to the defence money, scores of other government programs — the national park system, the Federal Aviation Administration, many different agencies — are seeing cuts on par with the defence budget cuts, some even worse.
What to expect from the Democrats is that they will be willing, in the end, to restore much or all of the defence cuts, but that they will also try to ensure that revenues increase to pay for that and that non-defence programs are salvaged in part or in whole.
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