As the Joint Committee on Deficit Reduction nears its final deadline, K Street's influential defense lobby appears to have everything to lose.
On the surface, the options facing the multibillion-dollar industry are all bad. If the super committee manages to reach its Nov. 23 deadline for producing $1.2 trillion in federal savings over a decade, a big chunk of that will almost certainly be sliced from the defense budget.
If the panel's negotiations fall apart, or if Congress doesn't approve its recommendations, automatic budget cuts known as sequestration will slash defense spending by as much as $600 billion over 10 years — an alternative that industry allies, and Defense Secretary Leon Panetta, call unthinkable.
But a third option is emerging, kicked around by industry champions such as GOP Sens. John McCain (Ariz.) and Lindsey Graham (S.C.): Undo the automatic spending cuts through legislation. It's an approach President Barack Obama and Senate Majority Leader Harry Reid (D-Nev.) have rejected, and analysts warn that such a move would trigger yet another downgrade of the nation's credit rating.
But it's a measure of the defense lobby's heft that its friends in Congress are even talking about dismantling the carefully constructed budget agreement that set the super committee in motion. However the super committee negotiations turn out, K Street's defense lobbyists will emerge better suited for battle.
The super committee showdown is just the latest in a long string of industry budget crises since Obama's pledge on taking office that "the days of giving defense contractors a blank check are over."
More than $800 billion has been cut from planned defense spending over the past three years, according to the American Enterprise Institute, which has helped organize a campaign to portray further cuts as economically devastating.
The ascendance of the tea party and of a new generation of deficit hawks on Capitol Hill has also thrown military contractors on the defensive. Historically, big contractors such as Boeing Co., Lockheed Martin, Northrop Grumman and General Dynamics have gone to bat for individual weapons systems, leveraging the jobs they represent. Despite generous lobbying and campaign expenditures, associations have taken a backseat. Last year, defense lobbying topped $145 million, according to the Center for Responsive Politics. Industry campaign donations exceed $171 million since 1990. Now that sweeping cuts put virtually all contracts on the table, industry players are organizing coalitions and trying to speak with one voice.
"I think industry came to the realization belatedly that this is a fight for the defense top line, not for individual programs," said defense analyst Mackenzie Eaglen, a research fellow at the Heritage Foundation. She added, "Now industry is trying to regroup and regain their footing."
Lois Lerner, director of exempt organizations for the IRS, arrives for a House Oversight and Government Reform Committee hearing on the investigation of the IRS' targeting of political groups. Lerner invoked her Fifth Amendment right to not testify and caused a protest from some committee members when she offered an opening statement and engaged in dialogue with members before invoking the right.
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