About

Economic Policy

FOCUS 1: Support Strong U.S. Economic Aerospace Policy

AIA strongly supports government policies and legislation that protect and expand the industry and foster a more competitive U.S. economy.

Support Federal Budgets that Advance Defense, Aviation and Space

Challenging Budget Environment and the Need for Continued Strong Advocacy

AIA supports federal budget priorities that advance defense, aviation infrastructure and space programs. In 2012, we must focus on maintaining robust funding levels as Congress and the administration decide how to allocate reductions in the Budget Control Act and sequester targets. At a time when the entire nation and our leaders are focused on job creation - a key element of all candidates’ platforms in 2012 - AIA is working hard to ensure that budget cuts do not jeopardize our aerospace and defense workforce or the hundreds of thousands of jobs our industry indirectly supports. AIA’s Second to None federal budget campaign is well underway and will continue to ensure the industry’s message is heard by lawmakers and other officials.

Defense
AIA supports a defense budget of four percent of GDP as a sensible floor and a metric that can act as a “warning light” of potentially inadequate investment in the security of our nation and the industrial base that supports the American warfighter. Growth in the U.S. defense budget and the procurement account peaked in 2010 and has now begun to decline. Many aerospace companies have already begun layoffs, consolidation and buyouts. This downturn was initiated in 2010 by DOD’s “streamlining” initiative, and was accelerated when the first phase of the Budget Control Act reduced the defense budget.

While the administration believes these reductions are manageable, the national security leadership within the administration has been emphasizing that further reductions would harm our critical military capabilities and lead to a “hollow force” in the future. The failure of the super committee under the Budget Control Act and a mandate to save $1.2 trillion pose unique challenges to AIA and the industry.

AIA is continuing its dialogue with the Secretary of Defense, House and Senate leadership, and members of Congress at large to ensure that industry’s voice is heard in funding decisions that affect the aerospace and defense industrial base. We will advocate that the defense budget must not fall below a critical floor. In summary, the industry’s position was made clear during Hill and press activities during National Aerospace Week in 2011 – “no more cuts.”

Civil Aviation and Space
As the federal budget tightens, it is vital to convey to Congress the importance of robust investment in FAA’s NextGen air traffic control system. AIA will work closely with the administration and congressional committees to promote adequate levels of funding for systems, air navigation procedures, and environmental analyses related to NextGen. In addition, AIA continues to support innovative ways to fund airborne civil aviation infrastructure (NextGen avionics), and the development of commercially viable sustainable alternative aviation fuels. All of our efforts at securing adequate funding levels will be muted if Congress  doesn’t pass a long-term FAA authorization bill. AIA is working at the highest levels within the Department of Transportation and talking frequently with members of Congress and their staff to urge passage of legislation before 2012.

Sustaining space programs will require support from both the administration and Congress. In order to encourage policy support to prioritize funding of space programs, AIA will publish a report in 2012 highlighting the technological achievements of U.S. space programs and their benefits to society. From satellite imagery advancements, to GPS guidance technology, to shuttle flight control breakthroughs, space technologies from all government sectors provide a highly convincing narrative for funding U.S. space programs.

NOAA is grappling with funding challenges for its new polar orbiting satellite program - the Joint Polar Satellite System (JPSS) that could impair the nation’s forecasting capability. Fortunately, through AIA’s and others’ efforts FY2012 funding which had been cut by the House was largely restored. In 2012, AIA will continue to inform decision-makers of the potentially grave consequences of a weather satellite coverage gap. We will also build a working relationship with NOAA as we strive to provide a vital industry presence across the entire space community.

AIA recognizes the acute need to advocate in support of commercial space growth. To this end, AIA supports a multi-year re-authorization of the commercial space launch indemnification provisions which are slated to end after 2012. We will also actively support the important role of FAA’s Office of Commercial Space Transportation (AST). Without a properly staffed and funded AST, the commercial space sector could face serious critical slowdowns that threaten their business models. Ensuring commercial space companies have a dependable and effective regulatory mechanism in the FAA is critical to their long-term success.

With regards to national security space, AIA seeks stable funding of DOD space programs as well as continued investments in responsive space and science and technology satellites. The association plans to increase its efforts to work with government officials to bolster the national security space industrial base and help make industry more globally competitive.

Achieve Tax and Financial Reform

In 2012, we will build on progress achieved to date on tax matters, deferral and subsequent repeal of the 3 percent withholding requirement on government contracts and advocacy for more competitive corporate tax rates. At the end of its session in 2010, Congress passed a one year extension of the R&D tax credit. Unfortunately, Congress failed to renew the R&D credit for 2012 and it has expired. AIA will continue to work with the National Association of Manufacturers and its broad coalition to advocate for a permanent extension of the tax credit.

In 2009, Congress deferred implementation of the 3 percent withholding until 2012. In 2011, the IRS proposed implementing regulations that deferred the start of withholding until 2013. AIA advocated strongly in 2011 and was successful in achieving Congressional approval to repeal the 3 percent withholding requirement.

Recognizing that America’s tax regime is among the least competitive internationally, AIA will expand its efforts to work with Congress and the administration on reforming the tax code. The debate on these and other tax issues in 2012 will intensify significantly as some in Congress seek to balance deficit reduction with increased tax revenues.

Support Major Reform of the Government Acquisition System

In 2011, at the request of the Defense Department, AIA reviewed DOD’s Efficiencies Initiative to determine whether the Initiatives would result in quantifiable and empirically verifiable improvements in cost performance for DOD acquisition programs while sustaining the national defense industrial base.

While we found that a number of the DOD Efficiencies Initiatives represented positive steps toward achieving the Government’s better buying power goal, we identified key elements of an efficient and simplified acquisition system and recommended specific policies to encourage and reward good performance, promote fairness and stability, incentivize cost savings and establish balanced and equitable risk-reward financial relationships. To that end, we proposed and continue to support: utilizing commercial products, practices and processes; creating a performance-based profit policy; eliminating the barriers to innovation; reforming the oversight functions; and reforming the regulatory promulgation process.

In order to maintain a competitive defense acquisition environment and sustain a healthy defense and aerospace industrial base, AIA will support activities which lead to the development of contracting and financial policies that reward efficiency and good performance, promote fairness and stability, encourage cost savings, and establish balanced and equitable risk-reward financial relationships.

One of AIA’s goals in this DOD-industry partnership is to help pinpoint and target systemic inefficiencies in the acquisition process. This can be accomplished by: identifying and eliminating current regulatory cost drivers; removing contractual barriers to the government’s access to commercial technology, products and services; eliminating unnecessary administrative procedures which burden the process; and allowing for the timely reporting and recovery of incurred costs.

Goal 1: Promote federal budgets, economic policies and sustained senior dialogue with key USG customers (DOD, DOT/FAA, and NASA) and the Congress to ensure a strong U.S. aerospace and defense industry		Sustain and enhance Second to None -- AIA’s advocacy campaign to communicate the importance of federal funding for aerospace and defense as a bedrock industry that is vital to national security, our aviation infrastructure, space leadership, technological innovation and the economy; work to prevent sequestration cuts Advocate for DOD procurement and R&D accounts for FY 13 of no less than 35% of the defense budget while maintaining a DOD topline at no less than the DOD request Continue regular industry-DOD communication through CEO-DOD senior leadership meetings Advocate for sufficient funding and policy to support a robust and balanced portfolio of civil aviation programs at FAA Advocate for sufficient funding and policy to support a healthy and balanced portfolio of space and missile defense programs at NOAA, NASA, and DOD
Goal 2: Support major reform of the government procurement system that benefits government and industry		Promote acquisition reforms that improve acquisition value Promote a streamlined and efficient acquisition process that does not impose unnecessary administrative burdens on contractors or contracting officers Promote the removal of barriers to the access of commercial technology, products, and services in government contracts Promote modified accounting standards that allow for timely reporting and recovery of incurred costs
Goal 3: Advance tax and financial reforms that strengthen America’s economy and global competitiveness		Work to adopt a tax structure that reduces cost of compliance, incentivizes job creation, and levels the playing field in U.S. and global markets