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Home / World / Strong defense spending cuts are unlikely under the Biden administration, executives say

Strong defense spending cuts are unlikely under the Biden administration, executives say



Compared to others seeking a Democratic nomination – especially Thanks to Elizabeth Warren (D-Mass.) And Bernie Sanders (I-Vt.) – Biden is a known quantity.

“Our industry knows Joe Biden very well, and he knows his industry very well,” said Arnold Punaro, a retired Marine major and Democratic Senate staff member of defense consultant. we.

“I think the industry will have a very positive outlook when it comes to national security,”

; said Punaro.

The Associated Press and other news organizations called the race for Biden on Saturday, as his lead over Trump in Pennsylvania increased by about 30,000 votes, or 0.5%. A victory in Pennsylvania means he has more than 270 electoral votes needed to win the election.

Share prices of major defense contractors rose on Wednesday, as Republicans appeared poised to hold the Senate and hold steady throughout the week.

The three major industry associations representing government contractors – the Aerospace Industry Association (AIA), the Professional Services Council and the National Defense Industry Association – do not endorse any candidate. . But all three have close ties with Democrats as well as Republicans.

AIA Chairman Eric Fanning personally endorsed Biden, citing the Obama administration’s role in canceling a “Don’t Ask, Don’t Talk” policy that prevents gay people from publicly serving in the military.

Fanning, a former Obama administration official, first openly gay to serve as Secretary of the Army, endorsed Biden in late June.

“The next president faces an enormous task: to repair our damaged democracy and our eroded moral leadership around the world,” Fanning said, according to the Associated Press.

Certainly, the industry will hardly reap the expected returns it enjoyed under Trump.

The size of the annual defense budget increased by around 10% when Trump took office and requested the Pentagon’s most recent budget of $ 705 billion for fiscal 2021. Major defense contractors benefit from mornings Well-funded weapon technology ants, including many hypersonic weapons bots and speeding up new fighter purchases. As a result, a number of major defense contractors have recorded record sales.

Some of the Trump-era defense policies are hard to keep. President Biden is likely to take a very different approach to military purchases abroad, especially with Saudi Arabia. The corporate tax cuts probably won’t enjoy the same support under the Biden administration.

Another war could break out on rising national debt. The congressional impasse has resulted in deep spending cuts as part of the arrangement process from 2013 to 2015, the recently low financial level for government contractors. Defense analysts have been predicting for years that the current defense budget may not grow any further even under the second Trump administration.

“There are obviously concerns that defense spending will drop if there is a Biden administration, but to be honest, I think that’s ridiculous,” Raytheon chief executive Gregory Hayes told CNBC’s Jim Cramer right away. before the election.

Raytheon is relying on its defense division to compensate for serious disruptions in its jet engine and aircraft divisions, which have been hit hard by a slowdown in air travel. Commerce.

“Defense has always been a bipartisan issue, and when Biden was vice president and before a senator, I think he took a pretty good approach to protect the nation,” said Hayes. “He understands the need to work [with] two sides aisle and provide defense. “

Even on the issue of nuclear weapons – an often politicized issue that can arouse strong emotions on both sides – defense executives seem confident that the current program will continue.

Falls Church-based Northrop Grumman defense contractor has significantly benefited from the Department of Defense’s efforts to overhaul the nation’s nuclear arsenal. In September, they became the main contractor for the Air Force’s Strategic Terrestrial Deterrence program, allowing them to replace Boeing as the nation’s primary supplier of intercontinental ballistic missiles. The ballistic missile program is estimated to be worth $ 85 billion over the next few decades, adding to Northrop Grumman’s nuclear portfolio including nuclear-capable B-21 bombers.

Northrop Grumman CEO Kathy Warden was keen to point out in a recent call to investors that the two weapons systems are backed by nuclear deterrence plans from both administrations. Both are part of a massive nuclear refinancing scheme that began under Barack Obama and accelerated under Trump.

“We are confident that a new administration will realize that value and continue to support well-underway modernization efforts for both GBSD and B-21,” Warden told investors in December. before.

Mike Petters, president and chief executive officer of Newport News, the Va-based shipbuilding company Huntington Ingalls. has denied fears that the Biden administration would put less money in the Navy budget. Petters said the Navy will likely continue with its current modernization plan – which, he says, calls for “faster, cheaper and smaller ships,” and more – regardless of who is in the House. White.

He argued that the Pentagon would eventually react to the same global threats it is facing.

“If you have a change in leadership and management, the newcomers will see the outside world as the people are there,” Petters said.


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