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Defense Industry Prepares to Defend Itself

Chris Maddaloni/CQ Roll Call
Sen. John McCain is one of many defense industry allies concerned about the effect of defense cuts on jobs and on military capability.

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."

Taking the lead has been the Aerospace Industries Association, which this summer launched a campaign dubbed "Second to None" with a simple message: no more cuts. The goal was to educate the public and Members of Congress about the industry and deliver the message that proposed cuts will kill jobs.

"It's communicating not only with super committee members, but with all Members, what the impact of budget cuts would be on jobs as well as the capability of the industrial base," AIA Vice President Cord Sterling said.

The association's lobbying expenditures in the third quarter of this year totaled just over $886,000, more than quadruple what it had spent at the same point in 2010. The campaign involved no paid ads but rallied defense industry employees to contact their members, including a September "march to the Hill."

The nonprofit Center for Security Policy this fall spearheaded a grass-roots lobbying effort dubbed the Coalition for the Common Defense. The idea was to bring together public policy experts, veterans and academics "who are very alarmed that we are in the process of eviscerating the military capabilities of this country," CSP President and CEO Frank Gaffney said.

"I think that it's past time, frankly, to do this," Gaffney added. "I wish we had been doing more of it earlier. But realizing that now is a moment when some potentially really perilous decisions are in the offing, it was better now than never."

Three think tanks AEI, the Heritage Foundation and the Foreign Policy Initiative also launched the Defending Defense project to deliver the message that austerity should not weaken defense. It was at one of that project's Capitol Hill events in September that Senate Minority Whip Jon Kyl (R-Ariz.) threatened to abandon the super committee if defense cuts weren't taken off the table.

Defense experts acknowledge that budget cuts are an inevitable part of the withdrawal of troops from Iraq and Afghanistan. For both political and practical reasons, however, those cuts are likely to fall not on personnel but directly on weapons systems and on research and development. That alarms defense contractors, who see cuts under virtually any debt reduction scenario.

In contrast to previous military draw-downs, "it's harder to see where the floor is, how low you can go," said David Berteau, director of the international security program at the Center for Strategic and International Studies. Eaglen, of the Heritage Foundation, was more blunt: "It's complete uncertainty and chaos."

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