Even without fiscal cliff, major defense cuts likely | News
HUNTSVILLE, AL (WAFF)- Even without the $55 billion spending cut the fiscal cliff would hand the Pentagon during this fiscal year, the defense industry is bracing for a tough 10 years ahead. With or without sequestration, it appears major military cuts are coming. President Obama is proposing tens of billions in defense spending cuts on top of the nearly half-a-trillion dollar reduction in Pentagon spending already on the table.
The current White House budget request would cut the discretionary military budget by $487 billion over the next 10 years. Add another $100 billion the President is pushing for, and there would be an 11 percent drop in yearly defense spending with almost $60 billion less by 2022.
With the war in Afghanistan drawing to an end in 2014, a shrinking military seems inevitable, and that will mean a shrinking defense-based economy that is so important in the Tennessee Valley. Many defense contractors across the country are keeping cash and putting a freeze on hiring and expansion. Defense consultants have said it is likely some companies will merge, and others may be forced out of business.
U.S. Congressman Mo Brooks of Huntsville said with the additional prospect of the fiscal cliff looming, defense contractors are bracing for the worst.
"We've already had companies that would be creating jobs, not creating jobs. We've already had companies that might have been stable laying off people in anticipation of sequestration occurring," he said. "Now, once you get to January 1, the impact of sequestration and job losses, the impact of these tax increases becomes much more noticeable."
If lawmakers do make a deal to avert the fiscal cliff before January 1, major military budget cuts will likely be part of the agreement, but that would ease the immediate sting that would be felt if the$55 billion cut triggered by sequestration went into effect.
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