Congress, NASA, White House

AIA measures the impact of sequestration on the space industry

Curiosity cartoon

An unlikely sequestration scenario. This illustration was included in an AIA press release Thursday about its study on the economic impact of sequestration-triggered budgets cuts at NASA.

We’re now only two and a half weeks away from the dreaded “fiscal cliff,” which includes significant budget cuts (aka “sequestration”) for NASA and other federal agencies. While discussions continue, there’s no sign that the White House and Congress are particularly close to a solution to avoid those automatic budget cuts.

Although the size of the cuts has been known for some time—an 8.2% cut across NASA’s various budget accounts, for a total of nearly $1.5 billion in cuts compared to the agency’s fiscal year 12 budget—the agency has not disclosed how it would implement those cuts, making it difficult to understand what programs, field centers, or contractors could be particularly affected by the cuts. However, the Aerospace Industries Association (AIA) has attempted to measure the fiscal and employment impact of the cuts on the overall national, as well as various state, economies in a report the organization released this week.

“Sequestration budget cuts… are the single greatest threat to our space programs’ continued success,” the AIA report, which also includes NOAA, warns. “Such a deep and reckless cut to these agencies would senselessly jeopardize U.S. space leadership and stifle exactly the kind of investment in innovation that our economy needs.”

The report’s basic conclusion: the cuts to NASA alone would result in a $2.8 billion reduction in Gross National Product and the loss of nearly 20,700 jobs. Texas would feel the biggest impact of any single state, with a loss in total output of more than $750 million and 5,600 jobs lost. It’s followed closely by California, with nearly $700 million in lost output and nearly 4,600 jobs. Rounding out the top five were Colorado, Maryland, and Alabama.

The report doesn’t go much into the methodology of its analysis, but it’s based on an earlier study that the AIA released, performed by Stephen S. Fuller of George Mason University, that took a broader look at the effects of sequestration on the economy. That report used an economic impact model called IMPLAN to convert the reduced federal spending into impacts on the economy and reduced jobs. It’s worth noting that while the press release about the report said that “over 20,000 NASA contractor jobs” could be lost, the original study’s job numbers included “indirect” and “induced” job losses, at suppliers or other subcontractors and in the general economy, respectively. (An AIA spokesperson confirmed Friday that this methodology was also used in the new report.) All the job losses related to NASA spending cuts would be in the private sector, as NASA is prohibited under its current authorization act from laying off civil servants through fiscal year 2013.

The exact economic and employment impacts will depend on exactly how NASA implements sequestration cuts, and many hope that this will be an academic exercise, with a solution to avoid sequestration found before the looming deadline. However, in even that case there’s likely to be some kind of spending reductions for non-defense discretionary programs like NASA—hopefully not severe enough to stop Curiosity before it stumbles across its Martian surprise party.

35 comments to AIA measures the impact of sequestration on the space industry

  • Fred Willett

    Even if SLS is not cut outright the reduced funding is inevitably going to lead to exactly those delays and schedule creep problems that doomed Constellation.
    This time the failure of another major NASA program may take the whole agency down with it.

    • Coastal Ron

      Fred Willett wrote:

      This time the failure of another major NASA program may take the whole agency down with it.

      Nah. NASA is already so fragmented in what it does and the political support each of the centers have, that one failed rocket program is not going to affect the whole agency, especially when it was Congress that forced NASA to build it in the first place, and there are no other programs that rely on the SLS for completing their mission.

      The SLS program, though large, is pretty isolated from all the other sections of NASA.

      • Fred Willett

        I was meerly quoting what Jeff Greason said in the wake of the Constellation cancellation.
        He said he happened to know that the idea of winding up NASA had been floated around some circles in Washington and in his opinion NASA wouldn’t survive another failure of the magnitude of Constellation.
        It’s not as if Constellation was the first program to fail. NASA has now notched up quite a list. Given that there really must be some serious cutting because of the Fiscal Cliff NASA could be in more danger than it knows.

        • Coastal Ron

          Fred Willett wrote:

          I was meerly quoting what Jeff Greason said in the wake of the Constellation cancellation.

          I like Jeff, he has a lot of common sense. Can you provide a link to the text that has the quote?

  • Robert G. Oler

    I smile everytime I think that sequestration was the brain child of the “keen minds of the GOP” and most of them are on record as having voted for it…perhaps Dean Chambers or Michael Barone was the one giving them that advise.

    I still think that there is a chance that it wont happen, but in the immortal words of Bush 43 “Bring it on” …Sequestration coupled with the end of the Bush43 tax cuts will help in three ways

    First the cut in spending, the increased revenues will help the budget. In return the cut in spending will help agencies decide which projects are “really useful”…Leaders can be judged on such things

    Second sequestration, coupled with the end of the Bush43 tax cuts, hopefully Harry R’s fix of the fillubuster and then the passing of tax cuts for the under 250K crowd, with the likely rejection of the GOP HOUSE of such a measure….will help end the reign of terror of the right wing/tea party of the GOP.

    There is little doubt who will get the blame for the fiasco in the post Romney era…day after day pressure will increase on teh GOP flunkies from both sequestration (and the Defense/Space technowelfare people who are going to be telling the GOP idiots who voted for it how badly its hurting them…have you seen the memo from a certain engine manufacturer to their representative who happens to be The Speaker) and most Americans will start pounding on them for the now “Obama tax cuts”

    That coupled with other events will aid in the destruction of the GOP as it is now constituted…and wont that be fun to watch.

    If you want some humor go find the video of Pete Olson explaining sequestration and the “HMMM” as people remind him “he” voted for it.

    Besides we can cut defense by enormous amounts and be “safe” (probably safer) and NASA…20K contractors should be cut…go out and find a job doing something useful…and dont worry even though you will lose great health care…single payer is coming.

    Winning is everything for the rest there is one spokesperson after another of the GOP putting their foot in their mouths.

    ROCK ON RGO

  • Mark R. Whittington

    In his zeal to hate Republicans and to celebrate what he thinks is the advent of total socialism, Oler ignores certain facts. The fiscal cliff was designed to be so horrible that Congress and the president would have to come to some agreement. No one considered the possibility that Obama might be just fine with what he thinks will be the results. But, as usual, it looks like he is overreaching and may reap the whirlwind as a result.

    • Robert G. Oler

      Mark R. Whittington
      December 15, 2012 at 12:52 pm · Reply

      The fiscal cliff was designed to be so horrible that Congress and the president would have to come to some agreement.>>

      And then there was the election which was in large measure over the notions of the GOP’s plan to fix the deficit and that of Obama’s and the GOP soundly lost. They only held onto the House because of massive gerrymandering…but there is not a single poll (unless Dean Chambers is back “unskewing” them again) which shows support for the current GOP plan.

      The GOP actions in the deficit control Act were about like a person taking a 1911, putting a loaded clip in it, chambering a round putting it to their head and saying “agree to my terms or I pull the trigger”

      The American people on election day said “go ahead pull the trigger”

      Because after 1 Jan 2013 it all gets worse for the GOP…as sequestration comes in and tax cuts expire it will be less then a week before the GOP will find they are like the South Vietnamese Army, dropping their rifles on the way to a compromise on Dem terms.

      It will take a week or less to get enough GOP votes to get a discharge petition to vote on the tax cuts sep and the upper class cuts will fail. Go look at the DIA map and you can see the GOP Congressman who will start moving for some compromise on defense spending as teh bucks from their buddies start drying up.

      The overreaching has been done by the GOP…they live in a North Korea type world where only the words of “the dear leaders” filter down and they believe them.

      The death panels for SLS and Orion are going to take off in sequestration. That is where the contractors are and thats where the savings are. If Bolden has any sense he will use this gift from the GOP to end the program.

      In the end the GOP is finally going to get at least half of what it wanted “spending cuts”…and the middle class tax rates are now going to be the “Obama cuts”

      Because of other events pressure is only going to mount on the GOP coalition of extremist…and in the end it will go down.

      Enjoy the Revolution Brother…I am RGO

  • Mark R. Whittington

    By the way, the likely reaction of NASA will be to stretch everything out in the hopes that things get fixed retroactively. The resulting chaos and disruption will be felt, of course.

    • Robert G. Oler

      Mark. SLS/Orion is slowing down all on its own…the programs you support bleeding tax dollars are simply grinding to a halt over the typical inertia.

      Commercial space is as all good ideas whose time have come…now unstoppable.

      Your side lost. The country will be better for it.

      Watch how the next six months play out. Nothing you say is going to happen, I’ll be correct about 90 percent of the time.

      Go read Barone. LOL RGO

    • common sense

      “in the hopes that things get fixed retroactively.”

      A Clinton administration will not change a thing for NASA current course.

      What is your point?

  • James

    Even if sequestration is implemented, as we all tumble over the fiscal cliff, there remains the problem that the debt will still increase as time goes by, just not as fast. So even if a last minute deal is struck, or not struck, the future financial health of this country warrants we all learn to speak Greek.

    Democracy in action!

    • Robert G. Oler

      So even if a last minute deal is struck, or not struck, the future financial health of this country warrants we all learn to speak Greek.”

      I cannot imagine why going over the cliff would cause one to want to learn the Greek language?

      The US is not Greece and our economy is not nor is in peril of becoming the state of the Greek economy. What we have had is a bad patch of policy from the GOP where rhetoric and half truths and flat out lies have been promulgated as facts.

      The tax cuts did not pay for themselves, the wars did not pay for themselves, we are in a military buildup that is driven by domestic fears rather then world realities and the vast amount of the spending we do is like SLS/Orion pushed in large measure by the same people who are clamoring that unless we stop spending we will be like Greece.

      A stupid analogy following a hypocrisy.

      It is not hard to cut the deficit. End the Bush tax cuts for the wealthy, stop the wars, bring defense spending to 2001 levels in real dollars, not 1945 levels…and then whats left is manageable.

      It is like the debate at NASA…you cannot fix the issue until you recognize the problem. its not tha SLS/Orion is not getting enough money; it is that SLS/Orion is spending to much money and getting nothing for it. But go look who is supporting SLS/Orion and with a very few exceptions it is the same people who say “we are spending to much”

      RGO

      • End the Bush tax cuts for the wealthy, stop the wars, bring defense spending to 2001 levels in real dollars, not 1945 levels…and then whats left is manageable.

        You apparently live in as fiscally ignorant a fantasy world as the Democrats.

  • amightywind

    The American public needs to understand how much the big government they voted for really costs them. Over the cliff, I say!

    • Robert G. Oler

      It is possible Wind that they mayans are correct after all…the world might end soon, we are in full agreement on sequestration.

      The problem is you are not going to like how it turns out.

      The American people like big government. There are the nut cakes who claim that they dont “Keep your socialized medicine off my medicare” but if these people were a little brighter they would recognize that they do.

      The GOP had a run at it because they sold the notion that 1) they were for cutting government and 2) when they didnt big government was free…the tax cuts pay for themselves, the war pays for itself…everything is free…

      But the reason the GOP wants to cut government AND HAVE SOMEONE ELSE suggest the cuts, is that those cuts are unpopular.

      and so as the hand of sequestration gripes the land, the losers in all of this are going to be The Tea Party and the GOP…enjoy RGO

      • amightywind

        I’ll tell you what will be unpopular. $300 missing from the average biweekly paycheck. It is too painless to vote to raise someone else’s taxes.

  • vulture4

    NASA has a hard time making tough decisions. As absurd as it seems, I suspect they would just order every program to cut costs 10%. R&D funding is the only thing I know of that is likely to be cut off. I would be really really suprised to see the logical decision of jettisonning SLS/Orion. of course, Congress can still order them to continue it.

    • JimNobles

      “NASA has a hard time making tough decisions. As absurd as it seems, I suspect they would just order every program to cut costs 10%.”

      I agree. I wouldn’t expect any large program to be eliminated in its entirety. Especially a program that members of Congress specifically decreed. For example, I expect SLS and MPCV to survive although probably at reduced levels. Some smaller programs are likely to go down though.

      As long as our efforts to expand into outer space are wedded to politics we’re going to have to deal with these types of problems. That’s why I really like Commercial Space. It’s not perfect but it may be all we Space Cadets really have. In these times anyway.

  • Robert G. Oler

    Ah Whittington is up with that tasty right wing morsel “socialism”…when the fact fail them, when the lies come unglued, one of the old standards that they turn to is “socialism”

    Trouble is that the only one(s) here advocating socialism in space politics are those who support SLS/Orion and Mark Whittington is one of them

    SLS is pure socialism. It was designed by government. Not a government committee, it was designed by the aides to elected representatives. “51D” aka Jeff B. Kay Baileys aide brags about helping design it.

    there is zero private investment in it. None. If sequestration happens the “contractors” for SLS will not keep their people on with their own funds; they will soon if the thing drags on dump them like rocks.

    There is no private use for SLS…it is a creature of government and really there is no government use for it. A mainstay at NASA these days is hordes of people working breathlessly trying to find something that justifies SLS.

    Its cost are staggering and will do nothing but grow as the already old systems get harder and harder to maintain.

    Mark is doing what the right wing does best..labeling people with mostly things that fit them.

    the right is a pestalance that is about to be stamped out. RGO

  • James

    @ RGO
    Going over the cliff or not, as a country we elect politicians that vote on behalf of programs that are bankrupting our country. Many have plans to solve this problem including RGO. How those plans working? Eh? The political class isn’t listening and hasn’t for some time. And we keep voting in the congress critters, and presidents, who keep the ball rolling toward financial ruin for this country.

    Learn to speak Greek!

    • Robert G. Oler

      James…there are so many differences between the US and Greece…but to our financial issues

      It is not that we spend to much…

      it is that we spend to much on things which have little or no value for the cost…coupled with the notion that we dont tax enough and tax the correct things that have since Bush43 started this nonsense driven the US toward a difficult moment.

      Command spending (ie deficit spending by the government on things) is what got the US out of the Depression, set the infrastructure to win WW2, won WW2 and then set the tone for a massive economic expansion from say 1948 to the 80′s.

      But it was on spending which 1) was essential and kept the country together, 2) things which more then paid back their cost and 3) things that had value past their initial building.

      The spending was well done, managed well and had little waste…today none of that is true.

      SLS is an excellent example of all that is wrong with spending…

      what got things out of control in the last decade is that we were told things (which were sold politically) which simply were not true.

      the war did not pay for itself, the tax cuts did not pay for themselves because they were targeted at creating upper class wealth, not the incentive to spend that wealth on infrastructure of value. and most of the “we want to spend it stuff” was spent on wars which left nothing once they were done.

      If SLS/Orion were to go to human flight…it would be nearly 45 to 50 billion dollars that it took to do that. there is no way we would find value for that cost.

      Sequestration is going to change things like that. Watch RGO

      • James

        @ RGO
        Agree that castration…er sequestration will change things. One thing Congress loves to do is feel the power of deciding budgets and all the perks (re: Lobbyist money) that comes with make such yearly decisions. The last thing Congress Critters want is a spreadsheet making decisions for them…cause that’s like being neutered!

  • vulture4

    During our longest sustained periods of economic growth in the 50′s, 60′s, and 90′s we had marginal tax rates ranging from 39.5% to 90%, and much higher taxes on capital gains than we do today. The massive tax cuts of 2000-2008 brought rampant speculation, extreme concentration of wealth, declining median income, a bubble economy and the worst crash since the Great Depression.

    It’s not rocket science, it’s just human nature. Rich people won’t pay their fare share of taxes unless they are forced to. After all, who would? Unfortunately people like Mitt Romney were given the money to lobby for changes in the law that cut their taxes to almost nothing and further increased their wealth. That kind of political power is not available to ordinary Americans.

    Human spaceflight requires tax dollars, and unless we end all the Bush tax cuts it will not be affordable.

  • ,em>During our longest sustained periods of economic growth in the 50′s, 60′s, and 90′s we had marginal tax rates ranging from 39.5% to 90%

    No one paid those 90% tax rates.

  • vulture4

    From 1942 until 1981 income over $200K was taxed at over 70%. ($200K in 1969 =~ $1.25M today) There were if anything fewer exemptions than there are today. This was the longest period of sustained economic growth in US history. I’m sure you will agree that a mere 39.5% would not in any way reduce growth, in fact wealthy people tend to invest overseas. By redistributing wealth which is concentrated in the hands of this select few, higher tax rates would create US jobs and infrastructure, put money in the hands of more customers,keep money in the US, and thus stimulate growth. Certainly we cannot afford human spaceflight without higher taxes.

  • Certainly we cannot afford human spaceflight without higher taxes.

    Nonsense. We can afford human spaceflight by just spending the money on human spaceflight, instead of big rockets that we don’t need. Tax policy is completely irrelevant to space policy.

    • common sense

      “Tax policy is completely irrelevant to space policy.”

      Absolutely preposterous. Tax are being used to fund NASA. Having space policy irrelevant to your source of revenues is absurd.

      • Coastal Ron

        common sense wrote:

        Tax are being used to fund NASA. Having space policy irrelevant to your source of revenues is absurd.

        NASA’s budget is pure spending, no revenue. That’s not unusual, as most government agencies and departments are pure spending – how much money does the DoD take in?

        There is no limit to the amount of money NASA can be given, it’s more a matter of how much Congress wants to spend. In fact NASA’ budget, as a percentage of the Federal Budget, is at it’s lowest point since 1959. The last time it had a big increase in budget was 20 years ago when the ISS was being built, but otherwise it’s been consistently below 1% since 1975.

        The agency needs a restructuring, it’s just a matter of who will take the lead to do it. But I’d be happy if it kept it’s budget at the same level it has today – that’s plenty to fund cutting-edge human exploration, but only if the SLS is cancelled.

        • common sense

          Space policy irrelevant of the revenues or the customers so to speak, has led to absurd policy implementation. It works for any agency be it NASA, the DoD or whatever. And we shall see how much longer it can be sustained without damaging the agency(ies).

          I am not disputing NASA’s budget. I am disputing the policy and its implementation that is not made in concert with public interests.

          But in the end we agree to the restructuring and it will either be voluntary or not so much. There is a choice. Now.

          NASA did not want SLS, Congress forced it down its throat. Some at NASA want SLS of course. And when SLS is being forced upon the agency then those voices of support have more influence on what NASA does. The amount of $$$ in any budget is the source of power of any manager. Not competency. Power. For how long?

      • Thinking that there is any relationship between government spending and taxation is what is absurd. Historically, there is zero correlation, other than that both coarsely go up over time. Washington spends what it wants to spend, regardless of revenue.

        • common sense

          “Washington spends what it wants to spend, regardless of revenue.”

          And this is not absurd to you? Oh come on! Whether you can technically do this or not is not the point. What is the point is to spend sensibly, spend with return in mind. Return must be defined otherwise you end up with SLS/MPCV and then I return your argument to you. If Washington can spend whatever it wants then let them have SLS/MPCV. Why do you care?

          • I care because I’d rather not have them waste the money, and I’d rather not have them perpetuate the myth that they are necessary to get beyond LEO.

            • common sense

              Then if you care and if you keep assuming they can just throw away money, how do you expect them to do the right thing? Somehow we must keep their feet to the fire. Remind them that money is not for free and that they owe the US public feedback on their expenditures whatever they are. Congress should also be paid for performance. If you assume they can just spend our money the way they like just because then be ready for more of the same.

              COTS like program can be on the rise, not only at NASA but also at DoD where they are badly needed. It is not about political ideology it is about pragmatism and making our government works for us all.

              Yet another quote – slightly edited for your enterainment – by Nicholson. “When I think of Congress I think of the public and I take away reason and accountability.”

              • I think Rand’s statement of
                “Nonsense. We can afford human spaceflight by just spending the money on human spaceflight, instead of big rockets that we don’t need. Tax policy is completely irrelevant to space policy.”
                is being misinterpreted. There is more than enough money in the NASA budget to do very ambitious deep space flight if we axe SLS and Orion/MPCV without raising taxes. As former Executive Secretary of the National Space Council under George H.W. Bush said this year, if we cancel SLS/Orion-MPCV:
                “At $17.3 billion [current NASA budget] we could have an absolutely unbelievable space program.”
                I suspect that would be true to a lesser extent even after the expected 5% hack that would occur if sequestering goes into effect.

                So from the standpoint of having a viable and vigorous human deep space agenda, the raising of taxes is not necessary for NASA to be truly relevant. But this is true only if we get rid of dead weight, such as SLS. However, if we keep SLS, then yes the only way to actually accomplish something would be to raise NASA’s budget by a truly exorbitant amount, which could only occur under the fantasy scenario of a really humongous tax increase. Even if that extremely unlikely huge tax increase occurred, then Congress still probably would not choose to up NASA’s budget by much if any. I give you the following as evidence: NASA’s budget did not go up significantly during the economic boom of the 90s when the government had a budget surplus.

  • josh

    going over the cliff will probably do more good than bad. taxes will go up (as they need to), spending will be cut (including the ridiculously bloated military budget). that’s good. let’s hope the republicans won’t be dumb enough to hold renewed tax cuts for the middle class hostage to the wishes of their billionaire masters.

    if we’re lucky sequestration will mean the end of sls and maybe even orion. yay!

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