Tuesday, November 13, 2012

Military Contractors Seek More Foreign Arms Sales to Offset Budget Cuts

Military Industrial Complex will Deal with Military Cuts by Pushing Greater Arms
Sales on Foreign Countries

Scroll down to this story by Christopher Drew below and see how the military industrial complex plans to save their necks from threatened arms cuts by just upping more arms sales abroad.  Exactly what we need to frighten the people with new claims that we need even more arms here to counter all the arms we sold abroad which are threatening our national security!   What a formula for perpetual war-- one sure way to keep the arms race going.
Analysts Expect a Deal to Delay Military Spending Cuts
Whether President Obama or Mitt Romney won Tuesday, the top Pentagon contractors had already begun preparing for a new reality of shrinking resources for the military. Boeing, for one, has slashed $2.2 billion in costs, including 6,300 jobs, from its huge military business since 2010. It announced Wednesday that it planned to cut an additional $1.6 billion by the end of 2015 by consolidating office space and divisions.
Boeing’s actions underscored the biggest question of the day in the industry: How soon and how deep will bigger cuts come? For more than a year, the contractors have been pressing President Obama and the House Republicans to reach a deal to forestall $500 billion in additional military spending cuts set to start in early January. With Mr. Obama’s re-election, that issue will flare up over the next few weeks in the lame-duck Congress. Political leaders will search for ways to avert or delay the cuts while talks get under way again on a broader deficit-reduction package.
Mr. Obama and Mr. Romney had both promised to stop the spending cuts, and it would presumably have been easier for Mr. Romney to work that out with House Republicans than it will be for Mr. Obama. But most military analysts believe that a deal will be reached that at least delays the cuts — which would automatically lop off 10 percent of the money for nearly every weapons program — because neither party wants to see them happen.
“I do expect a sausagelike budget deal where the really tough parts get deferred and the sequester mechanism is deferred or altered,” said Gordon Adams, a professor of international relations at American University, who helped oversee military budgets in the Clinton White House. But, he and other analysts said, the overall military budget is still likely to decline significantly over the next decade, as the war in Afghanistan ends and the military is required to share in reducing the government’s $16 trillion debt.
Tom Captain, the United States aerospace and defense leader for Deloitte, the giant accounting firm, said that perhaps $250 billion in military cuts could come as part of a grand bargain to reduce the deficit, which could also include lower entitlement spending and higher taxes. Mr. Adams added that in previous military drawdowns, like the one after the cold war, the Pentagon budget declined gradually in a steplike fashion, with the cuts becoming deeper than initially expected as policy makers re-evaluated the situation in preparing each year’s budget. He said the military budget dropped by 36 percent from 1985 to 1998 in inflation-adjusted terms, and he could see the current deficit-reduction efforts leading to total cuts of at least 15 percent, and possibly as high as 30 percent, by the end of the decade.
The Pentagon’s base budget, which soared after the 2001 terrorist attacks, has already declined modestly from a peak of about $530 billion in fiscal year 2010. Mr. Obama has proposed canceling plans for $487 billion in spending increases over the next 10 years. His plan would limit the growth in military spending to about the rate of inflation over that time.Mr. Romney had argued that Mr. Obama’s plans would weaken the nation’s defense. He had promised to reverse those decisions and increase military spending at a pace that some analysts had estimated would amount to a total of $2 trillion by the early 2020s. Mr. Romney would have halted Mr. Obama’s plan to cut the size of American ground forces back to about what it was before the 9/11 attacks. Mr. Romney also called for increasing the construction of Navy ships to 15 a year rom nine, saying the Navy needs 350 ships to support a shift in the Pentagon’s focus toward the Asia-Pacific region.Mr. Obama countered at the last presidential debate that the United States still spends more on its military than several other powerful nations combined. And after Mr. Romney noted that the Navy now has fewer ships than it had in 1915, Mr. Obama shot back,“Well, governor, we also have fewer horses and bayonets, because the nature of our military’s changed.”
Mr. Captain, the Deloitte partner, said that even if Mr. Romney’s campaign rhetoric had raised “glimmers of hope” among some military contractors, the reality is that the military budget will come down no matter who is president if the federal budget deficit is to be reduced.  Mr. Captain also said that the biggest military contractors — including Lockheed Martin, Boeing, General Dynamics and Northrop Grumman — all recognized that more cuts were inevitable and had been paring back. He said those companies and their vast networks of smaller suppliers had cut 55,000 jobs over the last two years to reduce costs.
Boeing’s military unit said that it had been planning its newest cost-cutting effort for some time and that it would have made the same changes even if Mr. Romney had won. Given the reductions that started in 2010, the unit has cut nearly 30 percent of its executives and plans to reduce the number of middle managers. But the company has been able to reduce the impact of some of the cuts by transferring defense workers to its thriving commercial aircraft business, a spokesman, Todd Blecher, said.
The big companies have been looking to increase foreign sales to offset the Pentagon cuts. But with other nations facing their own budget problems, Mr. Captain said, Deloitte has found that total revenue for military contractors across the globe declined by 3.3 percent last year and another 1 percent in the first six months of 2012. So even with large weapons sales to countries like India and Brazil, he said, “all of that is not going to make up for the difference.”