Wes Bush: Cuts to R&D Will Hinder Economic Growth, Rendering Sequester Pointless

Industry and academia came together Monday morning to reinforce their message that sequestration’s impact on government-funded research and development is harmful to all sectors now and in the future, and that continuing to focus deficit-reduction efforts on discretionary-spending accounts--which total only a third of all government spending--will slow or reverse economic growth.

Wes Bush, president and chief executive officer of Northrop Grumman Corp.[NOC] and chairman of the Aerospace Industries Association’s Board of Governors, joined representatives from universities, non-defense industry, manufacturers and the tech industry to argue that the government could more effectively tackle its growing debt if it continued its investment in research and development instead of disproportionately cutting it compared to other government spending as part of sequestration.

Northrop Grumman CEO Wes Bush
Northrop Grumman Corp. president and CEO Wes Bush. Photo: Northrop Grumman.

In addition to hurting military readiness right now, “the sequester also imperils our long-term economic security,” Bush said. “We know over the long-term, reducing the deficit requires growing our economy, and growth requires investment--not just capital investment in businesses and infrastructure, but also in the research and development that leads to the innovations that create the new products and services, the new jobs and stronger economy that we all desire. The sequester’s negative impact on R&D, not just to national security but to all government-funded R&D, will inevitably slow economic growth. So instead of helping lower the deficit over the long-term, the sequester actually hurts our long-term economic prospects.”

Bush said sequestration is “short-sighted” for only addressing defense and non-defense discretionary spending but not mandatory spending like Social Security and Medicare or revenue via considering changes to the tax structure.

Cutting R&D accounts so severely puts the U.S. technological edge at risk, he said, meaning American troops are in more danger when they step onto the battlefield.

“At the cornerstone of America’s national security strategy is our ability to provide technological superiority to all of our military service members--when they go into battle, we want them to be better prepared, better equipped than anyone else,” he said. “The pace of technology advancement around the globe is accelerating, and it’s accelerating just at a time when we are reducing our investment, an investment we need to stay ahead. Technological superiority does not just happen, it is the result of strategy and action.”

Rather than chopping each spending line by an equal percentage to lower the deficit, Dorothy Coleman, vice president for tax and domestic economic policy for the National Association of Manufacturers, said that “we believe the better approach is to focus efforts on looking at what works and what doesn’t work, eliminating duplicative and inefficient programs, and streamlining processes rather than making arbitrary and demanding across-the-board cuts.”

Several speakers addressed the idea of adding flexibility to how departments administer the sequestration cuts--achieving the same dollar amount of savings but letting department officials prioritize where the money would go. Emily Holubowich, co-chair of NDD (Non-Defense Discretionary) United, said that on her side of the sequester, adding flexibility is a moot point because there is so little money to go around after half a trillion is taken out of the budget that everyone will be hurting anyway.

Bush made clear that adding flexibility wouldn’t work on the defense side either. After the event, Bush said that Defense Secretary Chuck Hagel and top service officials have made clear in testimony to Congress that flexibility isn’t the real problem, it’s the steepness of the cuts on top of an earlier round of cuts in 2011.

“We’re talking about putting a little Band-Aid on a gushing wound,” he said of the suggestion of adding flexibility to sequestration. “So I think often times this conversation around flexibility is a diversion. It’s not a solution, it is actually a bad idea because it will give people the impression they’ve actually helped when they haven’t.”

Several lawmakers, however, including Senate Minority Leader Mitch McConnell (R-Ky.) have said recently that they support keeping sequestration as a spending-reduction tool and would not support eliminating it. Asked how to push his message to those lawmakers, Bush said the impact of sequestration “is not something that should be measured in the near-term, it needs to be considered in the long-term as well. And I think that’s actually been a missing part of the dialogue on the Hill. So many on the Hill that have voiced that perspective that maybe this isn’t so bad, they’re just looking at what they saw for a few months during 2013.”

Bush and the other speakers made clear that the longer sequestration continues, the longer the impact will be of canceled or delayed innovation, and the more expensive it will be to buy back military readiness.

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