Later on Wednesday, Panetta delayed deployment of an aircraft carrier strike group to the Middle East because of the budget uncertainty, and the Pentagon said it would seek a smaller-than-expected pay increase for services members in the 2014 fiscal year that begins in September.
At the White House, a day after Obama urged Congress to pass a small package of spending cuts and tax reforms to avert the sequester, senior officials met with six major defense contractors and the head of the Aerospace Industries Association, the industry’s largest lobbying group.
“The focus of their conversation was the potentially devastating impact of the sequester going into effect,” White House press secretary Jay Carney told reporters.
Carney noted that one of the companies, Northrop Grumman Corp, had a supply chain of 20,000 small businesses that would also be hurt by the broad cuts.
One industry executive said last week’s fourth-quarter GDP report, which showed a 22.2 percent drop in defense outlays, had unnerved White House officials. “The recent GDP report helped them realize how much of a role defense spending and aerospace play in the overall economy,” the executive said.
AIR FORCE WORRIES
Separately, the U.S. Air Force told Congress it would have to curtail its orders for Lockheed Martin Corp’s F-35 fighter jet, restructure a $52 billion tanker contract with Boeing Co and reduce its flying hours by 18 percent if lawmakers did not avert the cuts.
In a draft presentation to the House of Representatives Armed Services Committee obtained by Reuters, the Air Force said it faced shortfalls of $1.8 billion in war funding and $12.4 billion overall if Congress did not forestall the cuts.
While leaders of both parties say they share the concern about the cuts, the proposals they continued to advance on Wednesday were far apart.