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Defense Industry Pessimistic about ‘Cliff’ Deal as Pentagon Plans for Cuts; Loren Thompson Comments

1 min read
Loren Thompson
Loren Thompson

Officials from President Obama’s administration have given the Pentagon the green light to begin planning for $500 million in budget cuts set to take place as a result of sequestration.

According to The Hill, the defense industry is showing pessimism as negotiations between Speaker John Boehner and Obama on a potential deal came to an end last Thursday.

Boehner was forced to pull his “Plan B” tax proposal because he was unable to secure the 218 votes needed for it to pass.

“I don’t think most people in the industry really understand why their pleas have [been ignored],” defense analyst Loren Thompson told The Hill.

He added that there was no urgency among lawmakers in Washington to protect the defense budget because of its size compared to other industrialized nations.

Thompson said government contractors “don’t want sequestration but they’re capable of dealing with it”, adding that after the initial hit in January, defense firms will have more financial leeway in managing the future rounds of DOD cuts.

The standstill of the fiscal cliff talks ends a multimillion-dollar campaign by top defense industry lobbyists and interest groups to scrap the sequestration plan.

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1 Comment

  1. The Republicans put forward a “good faith” offer to agree to raising tax on the top 2% of income earners in exchange for Entitlement Reform and cuts to non-essential ineffective expenditures. Cutting DoD and Intelligence Agencies, regardless of the dollar amount, sends exactly the wrong signal to our foes and to terrorists and makes us weaker in the end. The Obama Administration must go along with a grand bargain or take responsibility for having no deterrent and then the U.S. is at grave risk. In regards to defense firms being capable of dealing with sequestration, although true, the impact to Government Contractor personnel will be far reaching and have exactly the opposite effect to unemployment as intended. We already have indecision! What happens when DoD budget cuts of this magnitude go into effect? The Washington Metro area has been somewhat insulated thus far but now the last bastion of the economy may tank. How is that a good decision?

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