The House Armed Services Committee (HASC) held a hearing Wednesday to discuss the potential effects of catastrophic budget cuts to defense industry and jobs in Virginia, if no action is taken before January 1st. The CEOs from Lockheed Martin, Pratt and Whitney, EADS North America, and Williams-Pyro were present to answer questions from HASC about their views on sequestration and how they expect its implementation to affect jobs and the American economy.
The witnesses were in agreement that sequestration could potentially raise the cost of capital and decrease competition, especially amongst second and third tier defense companies, and also diminish job seekers' incentive to work in an industry where cuts are looming. Della Williams, CEO of Williams Pyro, described sequestration as "cosmetic surgery with a chainsaw."
I explained that the amount the administration spent on the stimulus package for one year was equivalent to the amount that is being taking out of defense for 10 years. My big concern are all the cuts that are taking place, and I'm also concerned about the $487 billion we've already taken from Defense, much less the half trillion dollars that are coming. I am troubled by precedence here. At the beginning of the decade, the United States had 50 major contractors and today there are six. Today, only two companies, Boeing and Lockheed Martin, build U.S. fighter aircraft.
When I asked the witnesses what impact they thought sequestration may have that might be similar to the weeding out of the industrial base in the "90s, they agreed that they expect consolidation of corporations, noting that consolidation can severely limit competition. They further suggested the possibility that companies may simply exit the public market and will move toward more commercial markets.
AAs Virginia is the number one state for federal defense spending with 13.9% of state GDP coming from the defense industry, I am dedicated to working against sequestration and the potentially devastating impacts that it could bring. With defense cuts, 122,800 jobs are predicted to be lost in Virginia and the Commonwealth will lose $10.5 billion in Gross State Product. The defense industry is a vital part of the Fourth District's economy and provides jobs to thousands of people, and I will continue working to ensure the economic success of the Fourth District.