Fiscal-cliff negotiations reward defense industry with even more uncertainty

Posted by John Keller

Pity the U.S. defense industry. Congress this week -- in another example of that body's collective wisdom -- rewarded the defense industry, which has been buffeted by uncertainty for years now with ... you guessed it ... more uncertainty.

The so-called "fiscal cliff" negotiation resulted in a two-month delay of threatened congressional rescissions that threaten to cut nearly half a trillion dollars from the U.S. defense budget over the next decade.

Now it won't be until early March -- right around the time the Pentagon submits its fiscal year 2014 defense budget request to Congress -- that defense industry executives find out whether or not they have to deal with multi-billion-dollar cuts.

Related stories -- Looming fiscal cliff threatens to strike after the presidential election -- Rarely before have we seen a bleaker picture for U.S. defense spending -- Military business slows to a trickle; now a matter of how hard things will get.

It had been expected in the defense industry that fiscal-cliff negotiations that wound up earlier this week would give them answers to the many questions they have about potential deep defense cuts. Now they sit on pins and needles for another two months.

I don't know which would be more painful, knowing they have to deal with the fiscal-cliff defense cuts, or remaining in limbo for two more months.

How can defense companies do any long-term planning in this climate? The answer is, they can't. They haven't been able to make any substantial plans for more than a year, perhaps longer. Their suppliers are in the same boat.

No planning, and more uncertainty. At the risk of stating the obvious, this is no way to conduct business.