As Deadline Nears, Sequestration Called "Stupid, Shortsighted"
At a press conference today, the President of the Association of American Universities, Hunter Rawlings, called the sequester "stupid" and "shortsighted." The press conference brought the aerospace and defense industry together with groups representing health funding and research universities to raise more warning flags about the across-the-board federal spending cuts known as the sequester, which will go into effect 18 days from now unless Congress acts to postpone or replace it.
As we reported yesterday, this could be called "sequestration week" in Washington with just about everyone's attention focused on what will happen if those dire federal spending cuts go into effect on March 1 as dictated under existing law. Congress will be in recess next week, and will return with only four days left before that deadline, making this week prime time for affected groups to make their case.
Congress postponed the sequester from January 2 to March 1 as part of the year-end fiscal cliff debate. It can be postponed indefinitely if all parties agree. It was included in the 2011 Budget Control Act as a "poison pill" whose impact would be so catastrophic that politicians would be forced to find another way to reduce the deficit rather than let it happen. That strategy has failed so far.
The White House issued a fact sheet on Friday that clarifies the percentages by which discretionary budgets will have to be reduced as part of the effort to rein in the deficit. The federal budget is divided into discretionary and mandatory spending. Mandatory spending means money for entitlement programs (Social Security, Medicare, Medicaid etc) and paying interest on the national debt, for example. Discretionary spending is everything else, broken down into two categories -- defense and non-defense. "Defense" is actually more broadly defined as "security" spending and includes not only the Department of Defense, but nuclear weapons activities of the Department of Energy, the Intelligence Community, homeland security and similar programs. Non-defense includes NASA, NOAA, and most other government agencies with which the public is familiar.
Earlier guidance from the White House Office of Management and Budget (OMB) was that defense accounts would be cut 9.4 percent and non-defense accounts by 8.2 percent. OMB's most recent calculations are that defense cuts will be about 8 percent and non-defense about 5 percent. However, for the current fiscal year, FY2013, it will be an effective cut of 13 percent for defense and 9 percent for non-defense since the fiscal year already is underway and cuts must be absorbed in 7 months instead of 12. A total of $85 billion would be cut from FY2013 discretionary spending. The cuts are "across-the-board" meaning that each budget account is cut by the same percentage. Agencies do not have the opportunity to prioritize which programs are more important than others.
The Aerospace Industries Association (AIA) has been leading a relentless campaign to inform the public and policymakers about the dire consequences of such cuts on aerospace and defense companies. While AIA talks about cuts to both defense and non-defense spending, the focus of concern by that group and others, and many House Republicans, to date has been the potential cuts to defense. Considerably less attention has been paid to NASA, NOAA, the National Institutes of Health (NIH), the Centers for Disease Control and Prevention (CDC), the National Science Foundation (NSF), and the multitude of other non-defense discretionary agencies.
This morning, however, AIA teamed with groups that are working together through NDD United (Non-Defense Discretionary United) at a press conference to underscore the effects not only of sequestration, but of the likelihood of a year-long Continuing Resolution (CR), on all discretionary spending.
The government is currently funded under a CR that will expire on March 27. It holds agencies to their FY2012 funding levels and today's betting is that instead of dealing with the FY2013 budget request President Obama submitted to Congress a year ago, Congress will simply extend the CR for the rest of FY2013. That will render moot the President's FY2013 request to reprioritize some programs and initiate new ones, as well as holding spending to the FY2012 levels. (Meanwhile, some in Congress are criticizing the President for being late with his FY2014 budget request, which should have been submitted on February 4. Since Congress has yet to act on the FY2013 budget request, it is a curious complaint. The White House is having understandable difficulty determining what to request not knowing the fate of the FY2013 request or the sequester and has not told Congress when the FY2014 request will be sent forward. Defense News reports today that the Department of Defense has a tentative date of March 25 for sending its request to Congress.)
AIA President and CEO Marion Blakey stressed that federal budget cuts already have resulted in layoffs at many of AIA's defense and aerospace companies. The 10-year defense budget was cut $487 billion by the 2011 Budget Control Act, she reminded everyone, causing "immediate and serious drags on the economy" that are part of the reason for the Gross Domestic Product (GDP) falling into negative territory for the first time in four years. If sequestration goes into effect on top of those cuts, the impact on the nation's economy will be serious. "There is remarkable unanimity that sequestration is terrible policy. It will result in a hollow force for our military and force our economy back into recession," she argued.
Hunter Rawlings, President of the Association of American Universities (AAU), was much more blunt saying the sequester "is stupid, it is shortsighted, and should not happen." AAU represents 60 leading U.S. research universities. Peter McPherson, President of the Association of Public and Land-grant Universities (APLU) -- a group of 200 public research universities -- said sequestration is a "reckless and blunt tool" that would mean $10 billion less in government support for research and development (R&D) in FY2013 alone, and $90 billion through FY2021. Noting that other countries, like China, are increasing not decreasing R&D spending, he called sequestration "penny wise and pound foolish" and a threat to American innovation.
The group as a whole agreed that the deficit needs to be reduced, but did not offer a solution. Instead, their message is that discretionary spending should not have to foot the bill by itself. Cuts to all federal spending, discretionary and mandatory, as well as revenue increases, must be considered, they agreed. AIA Chairman and Northrop Grumman CEO and President Wes Bush said that the aerospace and defense industry has "long called for a balanced approach. ... We know you can't just pull one lever. You have to reach and pull all the levers available to our nation to deal with this. Unfortunately, what we've seen today is primarily ... a pulling of the lever on discretionary budgets [but] ... everything has to be on the table to make sure we make good decisions about the future of our country."
AIA and NDD United each sent letters to Congress today signed by their member organizations. The letters and other information are posted on the Second To None website.
Meanwhile, Air Force Space Command (AFSC) Commander Gen. William Shelton spelled out the effects the sequester would have on Air Force space programs. As reported in today's SatNews, a memo from AFSC to the Air Force Deputy Assistant Secretary for Budget listed the following actions that would be forced by the sequester:
Four congressional hearings are planned this week to look at various aspects of the impact of the sequester and/or a full-year CR. See our "Space Policy Events of Interest: February 11-15, 2013" article for details.
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