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Budgetary Forces May Align Against Defense Spending

Businesspeople who keep track of the defense budget will see quite a show during 2012. While the newly finished 2012 Pentagon budget seems to be business as usual, funnel clouds are darkening over 2013. “It doesn’t look like the landscape is going to change very much” during the current fiscal year, said John Pettitt, outgoing president of the San Diego Military Advisory Council, a local nonprofit group. Fiscal 2013 is promising to be another matter altogether. The new year starts in October. Because a congressional “super committee” failed to reach an agreement on reducing the federal deficit late last year, the Pentagon’s spending plan will likely be subject to automatic budget cuts, also called sequestration, beginning in 2013 and continuing into future years. Drastic Changes

Those cuts could be drastic. Details of the Obama administration’s fiscal 2013 Pentagon budget should become clear over the next few months, Pettitt said. Defense Department observers in San Diego say Congress may decide to change the sequestration law before the calendar changes to 2013. The 2012 Pentagon budget, which just finished its trip through Congress, includes minimal changes from 2011, stated Joe Kasper, an aide to Rep. Duncan D. Hunter, R-Alpine. Kasper said the situation will be “entirely different” going into fiscal 2013. Sequestration calls for saving money by cutting every program by a certain percentage. It’s a plan that Defense Secretary Leon Panetta protested in a Nov. 14 letter to members of the Senate. “Such a large cut, applied in this indiscriminate manner, would render most of our ship and construction projects unexecutable — you cannot buy three-quarters of a ship or a building — and seriously damage other modernization efforts,” Panetta wrote. Budgets for civilian help at military offices — such as clerical or engineering staff — saw cuts under previous Defense Secretary Robert Gates, and could see more cuts under the sequestration law, said Ken Slaght, a retired rear admiral and past president of the local National Defense Industrial Association chapter. NDIA is a nonprofit organization with chapters all over the United States. Slaght said San Diego’s strengths include its unmanned aircraft business, as well as electronic command and control systems. The Space and Naval Warfare Systems Command, or Spawar, buys the latter and keeps a variety of contractors close at hand. Slaght finished his Navy career as Spawar’s commander. Two key unmanned aircraft producers make San Diego County their home. They are General Atomics Aeronautical Systems Inc. in Poway and Northrop Grumman Corp. in Rancho Bernardo. With the Pacific region growing in importance, the Pentagon will station more ships in San Diego, Pettitt said. San Diego will probably not become home port to a third aircraft carrier until 2013, Pettitt also said — though he added that military strategy outweighs political considerations when it comes to putting a carrier in port. Kasper said the 2012 Pentagon budget provides full funding for the Mobile Landing Platform, a Navy auxiliary ship, being pieced together by General Dynamics Nassco. The outlook for San Diego’s ship repair and modernization industries is good in 2012, said Derry Pence, CEO of the Port of San Diego Ship Repair Association. “There is uncertainty about the state of the defense budget in 2013 and beyond,” Pence said by email.

Supporting Our Economy

Sequestration or not, San Diego’s military bases will continue to be economic engines for the community at large. David Nydegger, president and CEO of the Oceanside Chamber of Commerce, underscored the importance of his city’s neighbor at Marine Corps Base Camp Pendleton. He noted that the Pentagon is spending money to build a new hospital and exchange a short distance inside the gate at Camp Pendleton, and added that “we are looking forward to a great relationship in the coming year.” No one knows more about the vagaries of defense budgets than those who run the military services. “It’s been a roller coaster ride for my 39 years in this business,” said Adm. Robert Willard, commander of U.S. Pacific Command, at an appearance at a military advisory council breakfast Dec. 5. As for future defense budgets? We can’t expect the ride to stop now, Willard told his audience.

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