Sequestration, scheduled for January 2013, is already shutting down America’s defenses.
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Sequestration and bad decisions on weapons are almost enough for a perfect storm. The one remaining ingredient is the business environment for defense companies, which is getting worse by the minute.
We now have the highest corporate tax rate in the world. Companies can’t sacrifice business viability and profits for the public good. And they have to plan for sequestration even if Leon Panetta can’t. Which means that they are — right now — planning decreased production, investment, and hiring. And implementing those plans won’t be delayed until Congress, the Pentagon, and Obama sort things out.
Major defense contractors spend billions on independent research and development when the defense market supports it by buying new technologies. Those IR&D expenditures shrink when the market doesn’t support it, and our resulting technological advantage in war — which won the Cold War and several hot wars since — disappears. Government labs and research facilities just don’t have the capability to produce this sort of research, as their track record proves.
Sequestration — as Panetta said — will indiscriminately cut weapon-system spending across every program. It will mean contracts will be breached by the government, programs will be further reduced or cancelled, factories will be closed, and thousands of jobs will be lost. What neither Congress nor the White House seems to remember — and the past experience is deep and painful — is that government contracts frequently cost more to terminate than to complete. Contractors are entitled, by contract and law, to termination costs. Lawyers delight in them because they often are awarded after years of litigation. But the government gets nothing for them. No ships, no aircraft, no rifles for the infantry. Just a bill to pay.
That bill will not just be dollars. It will also be paid in a general reduction in our ability to defend ourselves, our interests abroad, and our allies. Without planning for defense, using the matrix of future threats our forces are expected to deter or defeat as a baseline, no one can say how bad that reduction of our defenses will be.
At a recent Air Force Association symposium, the commander of Air Combat Command, Gen. Gilmary Hostage, said, “… at some point, I run out of things to cut. I can only give up so much capacity to gain capability before dwindling inventories make even the best quality less dominant.” He added, “… to remain… capable, we cannot maintain the status quo and try to do more with less. That will just lead us down the path to a hollow force.”
Just so. Obama’s build-down, sequestration, a bad business environment, and a long string of awful decisions on weapon systems in the pipeline will accomplish what no enemy could: the transformation of our military into a paper tiger.
Thus the Perfect Pentagon Storm. Sequestration is coming in January, but the coming storm’s massive power is already being felt throughout the defense community.
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