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January 04, 2013

"Fiscal cliff" delay leaves defense industry hopeful

The North Texas defense industry is hopeful that Congress' decision to delay action on billions in automatic spending cuts may be a reprieve.

And maybe, that means less than a full sequester, defined by law as $500 billion in cuts, some say.

"We're in a holding pattern for another two months, but the (American Taxpayer Relief Act) agreement was a big step forward and a pretty clear sign that (full) sequestration probably won't happen,'' said Richard Aboulafia, an aerospace industry analyst for The Teal Group in Washington D.C.

Lockheed Martin released a statement Friday also saying that the delay was a positive signal.

“We are encouraged by the actions of Congress and the Administration to delay the implementation of sequestration with the passage of the American Taxpayer Relief Act,'' an official at Lockheed's corporate headquarters wrote in an email.

"We hope this is the first step towards permanent elimination of the automatic across-the-board sequestration cuts that threaten to weaken virtually all government programs and operations, damage our national security, and adversely affect our industry."

Many in the industry want full sequestration to be permanently eliminated.

Speculation is, however, that defense budgets will be reduced in some manner. For example, POLITICO reported last month that sequestration or not, the defense sector is preparing for a bad decade, as the U.S. plans to withdraw from war in Afghanistan.

Since 2006, the defense industry has seen some of the fattest budgets in history.

Yamil Berard



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