A July 13 meeting of the Colorado Space Coalition (CSC), a Chamber affiliate, called to light an important issue facing Colorado in the coming months: sequestration.
According to the U.S. House of Representatives Committee on the Budget, “A budget sequester is when money that would otherwise be spent under current law is held back and is used instead for deficit reduction.”
While that can seem on the surface like a way to begin addressing the national deficit, the problem is that, when the alternative is devastating and not strategic, it’s akin to playing with fire.
This issue is of particular concern to Colorado because the Budget Reduction Act of 2011, which includes the sequester stipulation, will cut $55 billion from national defense spending starting in January 2013. Those cuts are in addition to the $486 billion in cuts that have already been leveled at the aerospace and defense sector. Aerospace companies have already started reacting to those cuts by freezing or reducing research and development, hiring, and investments in equipment and facilities.
The U.S. Chamber reports that, “the Bipartisan Policy Center estimated in a recent report that sequestration would result in the loss of about one million jobs in 2013 and 2014 and a half a percent cut to America’s already meager economic growth.” In Colorado, according to the Colorado Space Foundation, the cuts could mean a loss of 17,000 defense-related jobs.
While we believe strongly that steps must be taken to address the federal deficit, legislators must address the deficit by weighing the impact of cuts and by making decisions that are best for our country and our economy.
The aerospace and defense industry generates $5.2 billion in revenue in our state and accounts for 81,667 direct and indirect employees. Colorado has the second-largest aerospace economy in the nation and it ranks first in the nation for private, high-paying aerospace job with a total annual payroll of $2.8 billion. Those jobs are an important asset to our state.
It is also important to note that the aerospace industry contributes to the economy and to business in a variety of ways, from climate and weather research to satellite communication and mobile technology. The innovation that happens as a result of aerospace research and development impacts our daily lives in numerous ways. A loss of funding of this magnitude could create a ripple effect that has consequences far beyond the industry.
We invite you to learn more about sequestration and stay abreast of the news that has the potential to impact our state and national economies in a profound way. The Aerospace Industries Association has launched an initiative, Second to None, to educate the public about this issue as well as the far-reaching work of the aerospace industry.
As a Chamber, we will continue to push for solutions to the national deficit, but those solutions must look at the economic impacts of these decisions and ensure we are not doing more harm than good with the solution.