Search form


These news clips on global space news are provided by the Coalition for Space Exploration for distribution by the Space Foundation to our constituents. You can also subscribe to receive a daily email version.

U. S. Faces Economic Hardship Over Budget Sequestration Issue, Aerospace Industry Group Cautions


 The long U. S. recovery from the recession of 2008-09 is marching toward a January cliff that could plunge the nation into new broad based economic hardship, according to an assessment of pending federal budget cuts prepared for the Aerospace Industries Association, a non-profit Arlington,Va., based trade and professional group that counts more than 300 corporate members.

The warning issued by the AIA on July 17 is linked to the Budget Control Act of 2011. Signed into law on Aug. 2, 2011, the legislation mandates significant reductions, or a sequestration, in U. S. Defense and non-Defense spending on Jan. 2, 2013, unless the White House and Congress can agree on an alternate course.

NASA’s mission is among the non-Defense federal activities that would be impacted.

In total, the legislation mandates $1.7 trillion in federal spending reductions from Defense, non-Defense and Medicare budgets over the next 10 years.

However, most of the economic impact will fall in 2013, according to the AIA’s  report, The Economic Impact of the Budget Control Act of 2011 on DOD and non-DOD Agencies, prepared by George Mason University economist Stephen S. Fuller.

He projects 2.14 million in new job losses — enough to send an already wavering U. S. unemployment rate of 8.2 percent up another 1.5 percent.

Many of the losses would come from the U. S. manufacturing sector, the ranks or professional and business service workers as well as the federal workforce.

The loss in personal earnings is estimated at $109.4 billion. The projected growth in U. S. Gross Domestic Product in 2013 would fall by $215 billion, leading to problems well beyond the defense industry, according to the forecast.

“These are the easily measured impacts,” noted Fuller in his report. “Other collateral impacts will be driven by behavioral factors. The loss of consumer confidence may suppress spending, especially spending requiring credit such as for autos and housing. Personal saving may increase taking further spending out of the economy. Business investment and private sector hiring may be dampened as a result of increased uncertainty contributing to further erosion of the national economy.”

The AIA report echoes warnings issued by the Congressional Budget Office in May and the International Monetary Fund in July.

The cuts would be spread across the Department of Defense as well as the departments of Agriculture; Commerce; Education; the Environmental Protection Agency; Energy; Health and Human Services, Homeland Security; Housing and Urban Development; Interior; Justice;  Labor; NASA; State and Transportation.

In 2013, Defense spending would fall 11.5 percent. The non-Defense agencies face a near 10 percent budget reduction. Annual budgets would be permitted in the aftermath to grow about 2.4 percent annually through 2024.

The states likely to be hardest hit include California,Virginia, Texas, Washington D. C, Maryland, Florida, Pennsylvania, New York, Massachusetts and Georgia, according to the AIA forecast.



Share This Page

Share this page with friends and bookmark for future reference.

Share on Facebook Tweet This Share on LinkedIn

Additional networks and bookmarking websites:


Give Us Feedback

We want to hear from you! Feel free to send us your comments about this page. General feedback for the Space Foundation is also welcome.