Defense firm chief says tax hikes should be on sequester table

Defense firm Pratt & Whitney’s president told House lawmakers on Wednesday it was time for Congress to consider tax increases to stave off $500 billion in automatic defense cuts.

“I think everything has to be on the table now,” Pratt & Whitney President David Hess said during the House Armed Services Committee hearing on the industry impact of the defense cuts, which are set to begin in January.

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Hess, who also heads the Aerospace Industries Association, indicated tax increases and spending cuts to other parts of the government should be on the table in order to avoid the serious damage cuts to the Pentagon would have on the U.S. defense industry.

His comment came in response to questions from Rep. Rob Andrews (D-N.J.), who pressed Hess, Lockheed Martin CEO Bob Stevens and EADS North America chief Sean O'Keefe on whether tax increases should be part of an alternative to the automatic cuts to the Pentagon and domestic spending set in motion by last summer’s deal to raise the debt ceiling.

Stevens and O’Keefe did not endorse the possibility of tax hikes in their responses.

After noting that former President Regan pushed for tax increases to salvage Social Security during his administration, Andrews said congressional Republicans would be “wise to follow Regan's example” on the automatic cuts, which are known as sequestration.

Democrats in both chambers have been adamant that any compromise on sequestration must include revenue increases or the elimination of tax loopholes for the wealthiest Americans.

Republican lawmakers have been reluctant to back any tax hikes as part of an alternative to the automatic cuts.

Rep. Hank Johnson (D-Ga.) went further than Andrews by asking defense industry chiefs their opinion on whether the Bush tax rates should be repealed.

That decision, according to O'Keefe, is “entirely a [government] priority” and one that lawmakers should make.