Aerospace group warns of job cuts if Congress fails to approve war bill

Congress should immediately pass emergency spending legislation for the Afghanistan and Iraq wars to prevent defense contractors from shedding jobs, an association representing the defense and aerospace industry said Monday.

The warning shot from the Aerospace Industries Association (AIA) comes as the Pentagon entered the last quarter of fiscal 2010 without the additional money requested to fight the wars in Afghanistan and Iraq.

Unless the war funding bill is passed “very quickly … the resulting disruptions to industrial supply lines will cause delays in critical equipment delivery, increased costs and could lead to lost jobs in the private sector,” AIA President Marion Blakey said Monday in a statement.

The House has approved the spending bill but it has yet to move through the Senate, which faces an extremely crowded calendar this month. A Senate leadership aide said the Senate is unlikely to move the legislation this week.

Secretary of Defense Robert Gates had called for the bill’s passage by July 4, warning that if it didn’t pass by then the Pentagon would be forced to curtail defense operations and eventually stop paying some active-duty service members.

That could have an impact on the broader defense industry, AIA warned.

“We begin to have to do stupid things if the supplemental isn’t passed by the Fourth of July recess,” Gates said at a Senate hearing on June 16.

Gates explained that the Navy’s and Marine Corps’s overseas contingency funds will begin to run out in July. To fund those branches’ war operations, the Pentagon would have to siphon money from the operations and maintenance accounts in the base defense budget, which would cause the disruption of other programs, he said. The Army’s war accounts will dry up soon after the Navy’s and Marine Corps’s, he said.

“We could reach a point in August, in early to mid-August, where we actually could be in a position where the money that we have available to us in the base budget runs out and we could have a situation where we are furloughing civilians and where we have active-duty military we cannot pay,” Gates said.

If the Pentagon starts eating into the regular defense budget and re-programs funds to pay for the wars, it can create “a great deal of turbulence in programs,” said Cord Sterling, AIA’s vice president of legislative affairs.

The Defense Department’s actions could have a cascading effect in the defense industry that could affect service contractors and weapons and equipment makers, Sterling explained.

Any turbulence in the Defense Department budget affects the operations of the defense industry and can cause delays, which in turn can increase costs at a time when the Pentagon is looking to squeeze savings out of the defense industry, Sterling explained.

“This does not help the industry get leaner,” he said.

Additions the House made to the war spending bill are complicating its passage.

The Senate in May passed a $58.8 billion supplemental bill to fund the wars in Iraq and Afghanistan, as well as provide disaster relief, but when the bill made it to the House, the lower chamber tacked on another $22.8 billion in funding for domestic programs. That triggered a veto threat from the White House over the offsets devised to pay for those programs.

The upper chamber could make changes to the House version of the bill or simply send back to the House its original version, further delaying the approval of the final bill because the House would once again have to cast a vote. Additionally, if Senate and House appropriations entered conference negotiations to iron out differences, that could delay its final approval.

The Senate expects to consider the supplemental appropriations bill during “this work period,” said Regan Lachapelle, a spokeswoman for Senate Majority Leader Harry Reid (D-Nev.). The Senate has four weeks of work scheduled before it is set to start its summer recess on Aug. 9.