Sequestration Hearing

The House Armed Services Committee is holding a hearing today to solicit defense industry perspectives on the effects of sequestration. Lockheed Martin CEO Robert Stevens, EADS North America CEO Sean O'Keefe, Pratt & Whitney CEO David Hess and Williams-Pyro CEO Della Williams are testifying.

In his opening statement, committee Chairman Buck McKeon (R-CA) said:

Barring a new agreement between Congress and the White House on deficit reduction, over a trillion dollars in automatic cuts -- known as sequestration -- will take effect. Although the House has passed a measure that would achieve the necessary deficit reduction to avoid sequestration for a year -- the Senate has yet to consider legislation. And the President's Budget submission, which sought $1.2 trillion in alternative deficit reduction through increased tax revenue, was defeated in a bi-partisan, bi-cameral manner.

This impasse, and lack of a clear way forward, has created a chaotic and uncertain budget environment for industry and defense planners. While the cuts are scheduled for implementation January 2nd, companies are required to assess and plan according to the law -- and sequestration is the law right now.

. . . And here's an excerpt from the opening statement of Ranking Member Adam Smith (D-WA):

I voted against the Budget Control Act, which put us on the excruciating path to sequestration.  We need a long-term plan for curbing our debt and for getting our deficits under control, but I disagreed with the BCA’s approach.  Deficit-reduction goals cannot be achieved through spending cuts alone, especially if those cuts are exclusive to non-defense programs.  Everything needs to be carefully considered in devising a balanced approach.  Revenues need to be increased, mandatory programs need to be brought in line with what we can afford over the long term, and domestic spending should be carefully examined to find real and substantial savings over time.  Unfortunately, instead of working seriously to find such a balanced solution, the majority in Congress has refused to consider revenue increases and focused instead on measures to kick the threat of sequester slightly down the road.  That is just not good enough.

With national security, the economy, and our future at stake, it is my hope that reason will prevail.  The solution to this problem is simple. Let’s put realistic revenue options on the table and find the $1.2 trillion in savings mandated by the Budget Control Act.  I stand ready to work with each of my colleagues in reaching a timely and sensible compromise.

Click here to view the CEOs' prepared testimony.