- Advocacy & Policy
- Research Center
The release of DOD’s “DD 1414, Base for Reprogramming” report on Tuesday marks a watershed in ongoing debate over the detrimental effects of sequestration budget cuts. For the first time, details from the program down to the project and activity level on how the $37 billion sequester affects the fiscal year 2013 enacted appropriations are available.
With respect to the investment accounts, research and development and procurement, the cuts are substantial. For the procurement account, $98 billion was slashed by about $9.5 billion or 9.6 percent. For the research and development account, $69.4 billion was cut approximately $6 billion or 8.6 percent. The impacts of these cuts will be felt broadly across the economy, triggering layoffs and lost investment in industrial plant, training and research and development.
Considering average annual inflation growth, the investment accounts would actually have to grow 3 percent annually just to maintain parity. Hence, sequestration puts the investment accounts in an immediate hole. Even if sequestration doesn’t impact budgets in fiscal year 2014, the ongoing FY 2013 cuts have imposed a shortfall on our investment accounts that will be compounded in future years. Even fully funded annual budget requests in the current Future Years’ Defense Plan (FYDP) would not make up the difference. In today’s scenario, we are able to rob Peter to pay Paul. In next year’s scenario, inflation occurs, Peter is robbed again and the cycle only gets worse.
Industry’s primary concern is the disruption of a stable and predictable percentage of the total budget allocated to the investment accounts. These accounts provide the foundation for an industrial base that can recruit and retain a skilled work force, initiate the new projects required to maintain a design and build capability and ensure a stable and flexible supply chain, all of which contribute to America’s technical superiority and market competitiveness.
Our industrial base is threatened by two huge waves. The first wave is what we know today, the $37 billion dollar sequester which falls heaviest against investment accounts. The second wave – something we can expect to be much worse – strikes if current law holds and the fiscal year 2014 budget is hit by an even larger sequestration amount of $55 billion. Congress and President Obama must work together in the current budget cycle to overturn this destructive policy and find a responsible, balanced and bipartisan path to address our long-term debt and deficit issues without crippling the very investments we need to promote growth in our economy and ensure our national security remains second to none.
AIA source: micah.edmond[at]aia-aerospace.org