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Deloitte Aerospace and Defense Global leader Tom Captain on defense-related jobs to be cut in sequestration.
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To that will -- The sequestration deadline less than two weeks away now and had nothing is done -- we could be facing one point two trillion dollars in automatic spending cuts and almost.
7% cut in the defense budget and a loss of more than 900000.
Defense related jobs but my next guest says.
It's the unintended consequences of the sequester.
That really has him concerned Tom captain is the aerospace and defense global -- -- to -- he joins me now Tom thank you.
So much for joining us obviously those headline numbers.
Well you know disturbing but what are the unintended consequences -- worry you.
Well thanks actually for having me on today is -- -- be eleven days until we see the unintended consequences of the 42 billion dollar defense cuts.
Keeping in mind that most of that will fall on defense contractors since the airmen navy and and army.
Personnel are off limits right now.
We've just done a study that shows that there's a million workers working for the private sector defense contractors and aerospace companies.
And they pay ninety billion dollars of payroll.
And those workers as well as the -- -- work for.
Pay 38 billion dollars of taxes keeping in mind that there's an average wage is probably twice the national average so they.
Have high leverage -- the economy.
Spending money with consumer products paying sales tax investment taxes as well as a higher degree of home -- so there is going to be.
And unintended consequence unfortunately if there's not a deal made in eleven days would you agree Tom -- defense spending needs to be reformed this may be the wrong way to do it but it's the only way right now.
Well -- -- this has an unintended consequence of 42 billion dollars of cuts.
In the past after Vietnam Korea as well as the peace dividend after the Berlin Wall fell.
There was a plan to slow down.
An amount that was similar to what we're facing here the keeping in mind that we've already taken about a 12% cut.
For defense contractors and they're looking at another seven to 12% again.
That's one out of four people in the industry that might be impacted.
How much does this compromise national security.
Well clearly one of the ways that is going to be cut in an unplanned fashion -- to stop paying.
For discretionary things like language interpreter and services as well as maintenance and operations.
And that means that we won't be able to deploy a our forces overseas.
In an expeditionary fashion whether they be for military purposes or expeditionary purposes for humanitarian aid.
Tom quickly and other defense companies with a hundred employees -- more -- state employment agencies supposed to get sixty days notice on they have layoffs.
If these cuts go into effect in eleven days that's not gonna happen source the outcome of -- Well it's unclear you're talking about the issue in the challenge of the -- -- yes you they are and which have anywhere from sixty to ninety days depending on what's the nature and and clearly we're past that point of no return so it's up to the defense contractors as well as the defense.
-- department to determine what what that looks like.
Instinct is those could be fines involved and and does the government paid fines -- Tom captain thank you so much for joining us on the President's Day appreciate it.
And you're welcome thank you here.
