Assuring the Viability of the U.S. Aerospace and Defense Industrial Base Steve Howell Director of Public Policy AIAA

2 Assuring the Viability of the US Aerospace and Defense Industrial Base Background  US Aerospace A&D industrial base is critical to our economy, national security, infrastructure and future workforce –Supports 1 million jobs directly, and another 2.5 million jobs downstream. –Contributes 2.23% of GDP –Small businesses generate almost half of private sector jobs, 64% of net new private sector jobs, 43% of high tech employment and 33% of exports* –Highly skilled, highly paid workforce –Possesses unique capabilities and expertise *AIA Second to None, 2012

Assuring the Viability of the US Aerospace and Defense Industrial Base  Budget Control Act (BCA) of 2011: –Sequestration mandates~10% cuts to all USG agencies –Additional cuts over next 10 years –Result in reduction of nation’s GDP by $215B, decrease workforce personal earnings by $109.4B and cost 2.14M jobs (1.5% increase in unemployment)*  FY2014 Budget Resolution (Bipartisan Budget Act) and the FY2014 Continuing Resolution (Omnibus Appropriations Act) –Provides some relief from sequestration for FY2014&15 –Does not affect cuts projected for FY *AIA Second to None, 2012

Assuring the Viability of the US Aerospace and Defense Industrial Base  BCA 10-year impact –DOD $800 billion –Non-DOD $700 billion – including $200 billion in mandatory programs (mainly from Medicare) 4 BCA Total Spending Reductions (DOD and Non-DOD – in millions of nominal $s* Report for AIA by Stephen S. Fuller, Ph.D., George mason University, July 17, 2012

Assuring the Viability of the US Aerospace and Defense Industrial Base Recommendations  Carefully consider the impact of budget cuts on continued viability of A&D industrial base and the ripple effects that has on national and economic security.  Eliminate automatic “across-the-board” defense budget reductions.  Reform federal acquisitions and procurement to allow for multi-year appropriations for complex systems.  Meet constitutional budget obligations which will provide assurances of continuity and sustainability of key programs and budgets. 5

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