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Defense Lobby Is Facing a Moment of Truth

The once-mighty defense lobby’s failure to head off some $500 billion in Pentagon cuts marks a moment of truth for an industry that has lost clout and allies on Capitol Hill, probably for good.

“They’ve been to the mountaintop, and they know they’re not there anymore,” said Loren Thompson, chief operating officer of the conservative think tank the Lexington Institute. “I think the companies are trying to figure some way out of this dilemma, but they’re feeling trapped.”

As some 800,000 civilian Defense Department employees brace for furloughs, industry players say there’s plenty of blame to go around. Factors include defense contractors’ tendency to fight among themselves for federal dollars instead of rallying behind a unified message, as well as the 2010 ban on congressional earmarks — the line items for pet projects, often defense-related, that once gave defense lobbyists leverage during budget negotiations.

The sequester, which President Barack Obama said in October “will not happen,” comes on the heels of a record $27 million in defense industry campaign giving in 2012, Center for Responsive Politics data show, mostly to Republicans.

Yet the GOP’s fiscal conservatives are now edging out the party’s defense champions. The upshot may be fewer political action committee contributions the next time around, said one defense lobbyist who asked not to be named.

“There’s a sense among [the] industry that the system is completely broken, completely dysfunctional,” the lobbyist said. “And a lot of them are asking: Why should they be giving political contributions anymore?”

Not that the industry’s titans, which include Boeing Co., Honeywell Inc., Lockheed Martin Corp. and Raytheon Co., have suddenly lost all leverage on Capitol Hill. Defense lobbyists back a budget deal spearheaded by House Appropriations Chairman Harold Rogers, R-Ky., that would at least give the Pentagon more stability and spending flexibility this year.

Slated for a vote this week, the plan would combine a continuing resolution to keep the government running past March 27 with fiscal 2013 Defense and Military Construction-VA spending bills. Without a 2013 bill, the Defense Department would be locked in at fiscal 2012 spending levels, exacerbating the automatic spending cuts of the sequester.

Defense lobbyists are not to blame for the across-the-board cuts that Pentagon officials warn will hollow out the military and hurt national security, according to many industry experts. The troop drawdowns in Iraq and Afghanistan, sharp partisan differences over how to balance the budget and the arrival of a new generation of budget hawks on Capitol Hill all played a role.

“I don’t think that the sequestration debate has much to do with defense, even though defense is likely to be its biggest victim,” Thompson said.

Still, political miscalculations and messaging missteps appeared to have dogged contractors throughout the sequester fight. House Armed Services Chairman Howard “Buck” McKeon, R-Calif., was one of several industry champions who reluctantly voted for the 2011 Budget Control Act amid leadership promises that the threatened cuts would never come to pass.

Lawmakers failed to fully grasp that the 2011 act had already cut defense funding by $487 billion, making the sequester a double whammy, said Michael Herson, president of American Defense International. “There have been a lot of problems with messaging,” he said.

Administration officials also didn’t spell out the full effect of the cuts until relatively late in the game; some argue too late. Making matters even worse was contractors’ historic tendency to protect their own turf at the expense of the industry as a whole.

“The defense industry has all of the unity and coherence of Balkan politics,” Thompson said. “These companies spend every hour of every day competing with each other. So getting them to do and say the same thing in the face of the sequestration threat is difficult.”

When Sen. John McCain, R-Ariz., and several colleagues last year asked 13 top defense contractors how the sequester would affect them, for example, they got differing responses. Lockheed Martin Chairman and CEO Robert Stevens wrote to say “significant job losses” and layoff notices were on the way. By contrast, United Technologies Corp. CEO Louis Chênevert told McCain in August, “we would probably not need to issue” such notices for several months.

Nor does the industry have a team of heavy-hitting associations backing it up. With the associations representing the Army, Navy and Air Force focused less on advocacy than on public events, lobbying has fallen almost entirely to the Aerospace Industries Association.

AIA officials have “punched above their weight,” said American Enterprise Institute Research Fellow Mackenzie Eaglen. The AIA has substantially increased its lobbying and campaign spending since Marion Blakey, former administrator of the Federal Aviation Administration, took over in 2007. The AIA’s “Second to None” campaign included economic studies to drive home the message that the sequester would kill 2.14 million American jobs. The AIA is pushing for a full reversal of the cuts.

“As people learn more directly and in their districts what the damaging impacts are, I think you will start to see people change their minds,” said Cord Sterling, AIA vice president of legislative affairs.

Still, the AIA’s budget, which according to tax records was $13.7 million in 2010, can’t compare with major trade groups such as the U.S. Chamber of Commerce, which spent $145.7 million that year. And long-term industry consolidation, which defense experts now consider inevitable, will translate into fewer lobbying and campaign dollars to go around.

“We are laying people off,” Herson said. “And the less employees we have, the less people we have to draw on for the PACs.”

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