Defense & National Security

Defense industry CEO: federal debt is greatest national security threat

Defense industry CEO: federal debt is greatest national security threat

As colleagues begged Congress to find a way around sequestration defense cuts, one leader of a top defense contracting company said the harm done by sequestration paled in comparison to the threat posed by runaway U.S. debt.

During a National Press Club panel event with fellow defense industry CEOs Monday morning, Tasc, Inc. CEO David Langstaff laid out the math.

“Consider the impact of just a one-percent increase in interest rates on our budgets. One percent on $16 trillion is $160 billion,” he said. “Over ten years, that is $1.6 trillion. In other words, just a one percent increase in interest rates creates a problem nearly equal to the problem we are talking about today when considering the impact of sequestration.”

According to terms agreed to under the 2011 Budget Control Act, Defense Department spending levels will be cut by roughly half a trillion dollars over the next decade beginning in 2013, on top over $487 in military budget reductions that were implemented last year.

“The reality is that the greatest threat to our national security over the long term is our federal debt,” Langstaff said.

Langstaff added that, like his fellow panelists, he believed that sequestration would devastate the defense industry, not only because of the amount of spending reductions, but because of the unplanned and indiscriminate way the cuts would be implemented.

“With sequestration, the more insidious problem stems from four factors: the uncertainty caused by our current predicament, the indiscriminate way in which cuts would be imposed…the waning confidence in our government to responsibly address a problem, and the resultant paralysis that has business watching from the sidelines or taking actions that they would rather not take that only exacerbate the problem,” he said.

Other industry leaders said the haphazard nature of sequestration made it especially destructive as policy.

“There really have not been guidance given across government for how (sequestration would be implemented,” said Northrop Grumman Corporation CEO Wes Bush. “Do federal employees get furloughed on Jan. 2 or Jan. 3? Nobody really knows. How do we balanced the difference between what happens to the civilian workforce and what happens to the procurement budgets? …Once you start rolling this downstream and really trying to parse the decisions that will have to be made should sequestration actually happen, I think you begin to realize how difficult this will be.”

While Bush and other CEOs on the panel emphasized tax revenue increases as a way to stave off sequestration, Langstaff broke with tradition and acknowledged that defense cuts will likely be part of a winning deficit reduction plan, though they ought to be crafted in a more strategic way.

“The responsible action for all of us – in industry and in government – is to face the need for reductions, and to get on with it in a manner that protects national security,” he said. “…And yes, spending cuts will more than likely include defense spending cuts.”

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