Statement by Marion C. Blakey, President and CEO of the AIA on Reports of the Contraction of the U.S. Economy in the 4th Quarter of 2012
The contraction of the U.S. economy in the fourth quarter underscores the Aerospace Industries Association's (AIA) warning for the past 18 months that severe across the board budget cuts – both to defense and non-defense discretionary spending – threaten to throw the economy into a tailspin. It is clear from the Commerce Department report that reduced government spending, primarily in the defense sector, is a major cause for the GDP decline. In July 2011, Congress enacted a cut of $487 billion to the defense budget, resulting in ongoing, significant job losses in the defense sector.
In less than 30 days, unless Congress and the White House act, sequestration will kick in, leading to higher unemployment, reduced tax revenue, and lower consumer spending. This will be the second wave that overwhelms our floundering economic boat, likely sinking us back into a recession.
As recently as [last week], Chuck Hagel, nominee for the position of Defense Secretary, said, “[Sequestration] would harm military readiness and disrupt each and every investment program. I urge Congress to eliminate the sequester threat permanently and pass a balanced deficit-reduction plan.”
Sequestration threatens both America’s national security and economic health. Congress and the White House need to focus on a solution that addresses the deficit problem smartly, through a balanced, bipartisan approach that doesn’t cripple our economy and hamstring our national security.