Defense industry ‘hopeful’ on sequester despite GOP pessimism

The leading defense industry trade group says it’s hopeful that a deal will be reached next month to avert across-the-board spending cuts despite growing pessimism in Congress that the cuts will take effect.

House Budget Chairman Paul Ryan (R-Wis.), the 2012 GOP vice presidential candidate, was the latest lawmaker to sound a negative note on the cuts, predicting Sunday that sequestration “is going to happen.”

“We think these sequesters will happen because the Democrats have opposed our efforts to replace those cuts with others, and they’ve offered no alternative,” Ryan said on NBC’s “Meet the Press.”

Cord Sterling, vice president for legislative affairs at the Aerospace Industries Association (AIA), said the defense industry is “very disappointed every time” there are statements like those Ryan made.

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But Sterling said that the trade group and its members are still “hopeful” that Democrats and Republicans in Congress, along with the White House, will come together before the March 1 deadline when sequester is scheduled to begin.

“Obviously it’s not encouraging, however we’re hopeful in the end that reason will come to play,” Sterling said. “All parties still have to come together ... It’s the responsibility for all of them to solve it.”

AIA has been leading the industry fight against sequestration for more than a year, warning of job losses and a negative impact on national security. The group has support from both parties that sequestration is bad policy, but there’s been no agreement over how to replace the $1 trillion across-the-board cuts over the next decade.

Speaker John Boehner (R-Ohio) said earlier this month that sequester was the GOP’s best leverage against Democrats in order to achieve the cuts in spending that Republicans are seeking.

The sequestration was only hours away from taking effect when Congress inserted a two-month delay at the last minute as part of the “fiscal cliff” deal on Jan. 1. With the debt-limit deadline pushed back until May, sequestration now has its own deadline on March 1, but there so far has been little urgency in Congress to address the cuts.

Sterling argued that it’s early — by congressional standards anyway — as budget deals in Congress typically only occur at the last minute.

AIA held a conference call for its members in the industry last Friday for an update on where sequester stands. Northrop Grumman CEO Wes Bush, the new chairman of AIA this year, led the call, which included more than 150 industry officials.

Sterling said the mood on the call was “anxious,” particularly among smaller suppliers, as the defense industry has been in a state of uncertainty for months now. He said AIA is still advocating a balanced approach that tackles revenues, discretionary spending and entitlements.

As for Ryan’s statement Sunday, Sterling said it didn’t reflect his position on sequestration, noting that the House has passed bills to do away with the sequester cuts for at least one year.

“It was more of an observation of where he thinks the current trend of things is, unless the two sides come together,” Sterling said. “I wouldn’t say necessarily that he wants to see that happen.”