Defense Department prepares for cuts

Dec. 25, 2012 at 3:17 PM

WASHINGTON, Dec. 25 (UPI) -- With the so-called fiscal cliff deadline days away, U.S. defense officials face the prospect of hundreds of millions of dollars in mandated budget cuts.

With budget negotiations between the White House and congressional leaders having failed so far to produce a compromise, administration officials have told the Defense Department to begin planning for the cuts mandated by legislation passed in 2011 as part of a congressional deal to raise the federal debt limit, The Hill reported. The Washington publication said defense contractors are frustrated by their lack of input in the budget negotiation process.

Defense company executives expressed frustration at being pushed aside in the deficit talks between President Barack Obama and congressional leaders, where attention has centered on the fate of the Bush-era tax rates that are set to expire in January.

Defense analyst Loren Thompson said there has been "no great urgency" among lawmakers and the White House on avoiding defense spending cuts.

"I think there's a creeping sense of pessimism in the defense sector ... . I don't think most people in the industry really understand why their pleas have [been ignored]," Thompson said Friday.

Defense contractors will be able to deal with a shrunken Pentagon bottom line, at least in the short term, he said.

"They don't want sequestration but they're capable of dealing with it," Thompson said.

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