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Friday, January 4, 2013

Sequestration Delayed, Aerospace Industry Awaits Next Congressional Action

Woodrow Bellamy III @WBellamyIIIAC

The newly passed “fiscal cliff” deal delays the $1.2 trillion across-the-board federal budget cuts until March, keeping the U.S. aerospace community awaiting final action from Congress and the President to either avoid or enact the cuts.
 
President Barack Obama signed the American Taxpayer Relief Act of 2012 into law Wednesday, raising taxes on top earning Americans and avoiding the worst effects of the “fiscal cliff.” But the bill provided no final action on sequestration, and the cuts would have even more impact if they do start in March because they would have to be squeezed into a shorter time period.
 
The aerospace and defense industry is still left with a feeling of uncertainty going forward, especially because of the potential of the cuts to delay NextGen, the modernization of the nation’s air transportation system that so many aerospace stakeholders have an interest in.
 
“If sequestration is not solved in the next 57 days, it would be an abdication of responsibility by the leaders of this country,” said Aerospace Industries Association (AIA) President and CEO Marion Blakey, reacting to the delay of sequestration. “According to reports, the Pentagon will be forced to send furlough notices to its 800,000 civilian employees if Congress fails to deal with this ill-conceived policy.  Those notices will inevitably become layoff notices if nothing is done.”
 
Lockheed Martin CEO Marilyn Hewson recently echoed Blakey’s position, saying the delay of sequestration “stifles investment in plant, equipment, people and future research and development essential to the future health of our industry.”
 
The aerospace industry had warned in the last few months of the year that the fiscal cliff and sequestration could have a devastating impact on the industry.  
 
“We are obviously concerned about spending cuts and their impact on FAA programs like NextGen, but also the need for Washington to raise new revenue,” National Business Aviation Association President and CEO Ed Bolen said on Dec. 31, acknowledging the dilemma faced by lawmakers in crafting a new deficit reduction package.

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