Archive for January, 2012

The U.S. will have a “smaller and leaner” military force as outlined by President Barack Obama’s strategy announced Thursday to cut defense spending. Until more details emerge and Congress addresses the issues in the coming months, it’s uncertain exactly how the Space Coast will be affected. However, financial analysts are optimistic about the future for defense contractors like Harris Corp., Brevard County’s largest employer. In addition, because of the emphasis that would be placed on intelligence gathering, surveillance and communication, Patrick Air Force Base and Cape Canaveral Air Force Station — where military satellites are launched — are expected to see a positive impact. “I would say that the intelligence, reconnaissance and surveillance are areas less likely to be cut back,” said Lawrence Harris, a financial analyst with CL King Associates. Harris, who has no connection to the company of same name that employs 6,500 on the Space Coast, said that although the details and how Congress will respond are unknown, he sees no adverse effect for Harris Corp. or the county. Existing contracts with the Department of Defense, such as for mapping and software development, should remain intact. “I don’t think that’s going to change significantly,” Harris said. The new defense strategy outlined by Obama includes $487 billion in cuts during the next decade. An additional $500 billion in cuts could be coming if Congress follows through with plans for deeper reductions. The announcement comes weeks after the U.S. officially ended the Iraq War and after a decade of increased defense spending in the aftermath of the Sept. 11 attacks. Sen. Bill Nelson, D-Orlando, said large standing armies in Europe are not needed anymore and that the president wants to focus on capabilities of quick-strike forces. He said that under the proposal, the United States may not be able to fight two sustained wars at the same time, but could build up the forces if necessary. Nelson said that while cuts will have to be across the board, he does not see any negative impact on the Space Coast.

Tuesday, January 17th, 2012
Congress tries to disable automatic spending cuts

Congress tries to disable automatic spending cuts

The deficit-slashing supercommittee left Congress with quite the mess to mop up in 2012.

With each day that ticks by, the nation becomes a bit closer to a painful round of automatic budget cuts that the 12-member supercommittee failed to prevent because of its members’ inability to agree on a $1.2 trillion deal to cut the deficit.

So, despite a veto threat from President Barack Obama, congressional Republicans and a handful of Democrats have vowed to somehow unravel the spending cuts this year — which are scheduled to hit defense and domestic programs equally in January 2013.

“I’m very concerned about the defense cuts in sequestration, but it’s also the cuts to nondefense discretionary [that] are also devastating,” Sen. Joe Lieberman (I-Conn.) told POLITICO. “Ultimately, I think there’s a very strong feeling that it’s not going to go into effect.”

It’s easy to see why there’s such an appetite on Capitol Hill to blunt the budget ax.

If the defense cuts, including the trigger, go on as planned, it could lead to more than 1 million job losses in just one year, according to a study conducted by Stephen Fuller of George Mason University. And the domestic side of the ledger will also be hit hard — for instance, the National Education Association has estimated that more than 71,000 education-related jobs would disappear in 2013 under sequestration,the formal term for the $1.2 trillion in the automatic, across-the-board cuts.

“The Department of Defense just can’t sustain additional cuts beyond what they’ve already taken without seriously jeopardizing … the national security capability,” said Cord Sterling, vice president of legislative affairs for the Aerospace Industries Association, a group that has been talking with lawmakers and staffers on the impact of sequestration. “It will [also] have a very serious and negative impact on the U.S. manufacturing industry.”

But how it ultimately shakes out is the question mark looming over Capitol Hill this year.

House Speaker John Boehner (R-Ohio) has said “no one really wants to go there” on the spending cuts and that Obama needs to work with Congress to find a way to avoid them. And a handful of legislative proposals to block the cuts are already circulating in Congress.

California Republican Buck McKeon, the powerful chairman of the House Armed Services Committee and a Boehner ally, has introduced a bill that would trim the federal workforce and use those savings to offset one year of automatic cuts to both defense and domestic programs.

Panetta Said Ready to Release First Budget Numbers Jan. 26

Wednesday, January 11th, 2012

(Updates with budget request schedule and numbers beginning in second paragraph.)

Jan. 11 (Bloomberg) — Defense Secretary Leon Panetta is scheduled Jan. 26 to release the first details of the Obama administration’s fiscal 2013 defense budget, according to a U.S. defense official.

The date might change and the venue and level of detail haven’t been settled, said the official, speaking on condition of anonymity in advancement of an announcement. The entire Pentagon budget, along with the rest of the administration’s federal spending blueprint, is due to be released Feb. 6 and sent to Congress.

Defense spending in 2013 would be reduced 1 percent from this year’s initial $525.3 billion request before growing annually 1.8 percent in 2014, 2.3 percent in 2015, dropping to 1.9 percent in 2016 and increasing 2.2 percent in 2017, according to a Nov. 29 Office of Management and Budget document.

The administration plans $82.54 billion in funding for the Afghanistan and Iraq wars for 2013, according to OMB.

The basic defense-only “topline” numbers are currently projected at: $523.8 billion in 2013; $533.0 billion in 2014; $545.5 billion in 2015; $555.9 billion in 2016 and $567.9 billion in 2017, according to OMB.

The percentage increases are expressed in “nominal growth,” not adjusted for inflation. The OMB numbers apply only to Pentagon spending and not to non-Defense Department security agencies such the Energy Department, which maintains the nation’s nuclear weapons.

The 2012-2021 defense plan calls for $5.652 trillion in spending. OMB calculated that the total Budget Control Act- mandated defense cut over those years is $488 billion — or about an 8.5 percent total decrease.

The OMB data outlined the distribution of the initial $261 billion in reductions mandated by the Budget Control Act: $27.5 billion in fiscal 2012; $46.8 billion in fiscal 2013; $53.3 billion in 2014; $52.7 billion in 2015; $54.6 billion in 2016 and $53.5 billion in 2017.

Will Obama’s ‘leaner’ military plan be felt on Brevard’s bases?

Friday, January 6th, 2012

The U.S. will have a “smaller and leaner” military force as outlined by President Barack Obama’s strategy announced Thursday to cut defense spending.

Until more details emerge and Congress addresses the issues in the coming months, it’s uncertain exactly how the Space Coast will be affected. However, financial analysts are optimistic about the future for defense contractors like Harris Corp., Brevard County’s largest employer.

In addition, because of the emphasis that would be placed on intelligence gathering, surveillance and communication, Patrick Air Force Base and Cape Canaveral Air Force Station — where military satellites are launched — are expected to see a positive impact.

“I would say that the intelligence, reconnaissance and surveillance are areas less likely to be cut back,” said Lawrence Harris, a financial analyst with CL King Associates.

Harris, who has no connection to the company of same name that employs 6,500 on the Space Coast, said that although the details and how Congress will respond are unknown, he sees no adverse effect for Harris Corp. or the county. Existing contracts with the Department of Defense, such as for mapping and software development, should remain intact.

“I don’t think that’s going to change significantly,” Harris said.

The new defense strategy outlined by Obama includes $487 billion in cuts during the next decade. An additional $500 billion in cuts could be coming if Congress follows through with plans for deeper reductions. The announcement comes weeks after the U.S. officially ended the Iraq War and after a decade of increased defense spending in the aftermath of the Sept. 11 attacks.

Sen. Bill Nelson, D-Orlando, said large standing armies in Europe are not needed anymore and that the president wants to focus on capabilities of quick-strike forces. He said that under the proposal, the United States may not be able to fight two sustained wars at the same time, but could build up the forces if necessary.

Nelson said that while cuts will have to be across the board, he does not see any negative impact on the Space Coast.

Defense Secretary Panetta faces tough choices on national security in 2012

Monday, January 2nd, 2012

When it comes to national security issues in 2012, the person who faces the toughest choices is Defense Secretary Leon E. Panetta.

Look at what’s on his plate: the Pentagon’s budget crunch, the war in Afghanistan, the postwar period in Iraq, Iran’s nuclear ambitions, Israeli issues, U.S.-Pakistan relations, China’s growing military and the biggest challenge of all — Congress.

Hovering over him like a cloud is the presidential campaign. A chorus of Republican candidates, as Mitt Romney already has done, will almost certainly take issue with the Obama administration’s defense policies and spending levels. While the economy will be central to the campaign debate, defense will be a close second.

The budget crunch goes far beyond numbers. This week, the Pentagon will produce a revised defense strategy that will provide the basis for the fiscal 2013 Defense Department budget. The numbers themselves will come later this month as part of President Obama’s budget and will reflect the second year of a 10-year plan to cut $489 billion in defense spending, made in response to August’s Budget Control Act.

It remains to be seen what further defense reductions will be made as Congress wrestles with the “sequestration” requirement in the August statute — across-the-board budget cuts of more than $1 trillion over 10 years, half of which are to come from national security spending. These cuts were triggered by the failure last fall of the congressional “supercommittee” to come up with a deficit-reduction plan.

In a Nov. 14 letter to Sens. John McCain (R-Ariz.) and Lindsey O. Graham (R-S.C.), Panetta wrote that the Budget Control Act cuts “are difficult and will require us to take some risks, but they are manageable.” Further cuts under sequestration, he said, “would tie [the Defense Department’s] hands.” For instance, he said that across-the-board reductions would have to be applied equally to major construction programs, rendering “most of our ship and construction projects ‘unexecutable’ — you cannot buy three quarters of a ship or a building — and seriously damage our modernization efforts.”

Panetta has proposed that, if additional cuts are required, the Pentagon be allowed to pick and choose where they are made and not have to apply them across the board.

To reach the initial $489 billion in cuts, Panetta will have to defend before Congress the expected reductions in personnel for fiscal 2013, as well as the scaling back or ending of some weapons programs. All of these have their constituents inside and outside government — and especially on Capitol Hill.

How many F-35s do you buy; should you choose manned or unmanned weapons systems; how many nuclear supercarriers do you need; do you modernize all three legs of the nuclear triad — strategic bombers, land-based intercontinental ballistic missiles and strategic submarines? While dealing with these questions, Panetta must also protect money for operations, maintenance, and research and development, the favorite areas for congressional budget cutters.