December 04, 2012
Credit: Credit: Architect of the Capitol
U.S. weapons industry executives on Monday urged the White House and Congress to end what one CEO called “political theater” and act to avoid looming automatic budget reductions that will cut projected military spending by another 10 percent this year.
Executives from four companies told a news conference that piling an additional $500 billion in spending reductions on top of the $487 billion in cuts already being implemented by the Pentagon would harm their industry and national security. Both sets of cuts would be phased in over a decade.
They called for tax increases and spending cuts as part of a plan that will remove the uncertainty that has already sparked layoffs in their industry, slowed investment and made it harder to recruit top high-tech talent.
The executives conceded that some additional cuts to projected military spending levels were likely in coming years -- even if Congress acts to avert automatic cuts due to start taking effect on Jan. 2 -- given the depth of the fiscal crisis facing the United States.
Monday’s event, accompanied by a letter to President Barack Obama and Congress, was the latest effort by arms makers to reverse spending cuts triggered by the failure of Congress to find $1.2 trillion in other deficit-reducing measures.
Over the past year, there have been well-publicized rallies at weapons plants around the country. Executives, union members and local lawmakers repeatedly warned that the cuts could lead to nearly 1 million job losses in the defense sector and more than 2 million in the United States overall.
Critics say the arms industry is overdue for a correction after more than a decade of sharp gains and hundreds of billions of dollars of cost overruns on big weapons programs. They say the Pentagon’s annual budget remains at historically high levels, and that other sectors create more jobs.
Heidi Wood, senior aerospace analyst with Morgan Stanley, said investors and companies expected Congress to ultimately avert the fiscal cliff through a temporary extension, but she was cautious since the two sides remained far apart. The Arca defense index closed 1.11 percent lower on Monday.