At a campaign stop with Gov. Bob McDonnell Thursday, Republican U.S. Senate candidate and former Gov. George Allen told employees at a Newport News defense contractor that the looming sequestration cuts were already hurting their industry.
Allen told nearly 20 employees at Spectrum he has heard from small defense contractors from across the state, including their own, that contracts are already drying up due to the arbitrary sequestration cuts set to go into effect Jan. 2 if Congress cannot come up with a deal to avert them by then.
"The smaller contractors are saying, 'We're just not getting the contracts or orders from the prime contractors,' " Allen said. "They're already having an impact."
Sequestration was put in place in the summer of 2011 as part of an eleventh hour deal between Congressional Republicans and the White House to raise the nation's debt ceiling in order to avoid a government shutdown and the nation defaulting on it's debt obligations.
The $1.2 trillion in cuts include nearly $500 billion to defense spending. A study commissioned by the Aerospace Industry Alliance predicted that Virginia could lose more than 207,000 if the cuts go into effect.
Allen opposed the sequestration deal when it was put in place.
McDonnell supported the deal at the time. He said having at the time the deal was the best way to avoid the negative economic impacts of not raising the nation's debt ceiling.
McDonnell said Thursday that sequestration was a "hammer" to get members of Congress to come up with a plan to rein in a roughly $1.2 trillion federal budget deficit and more than $16 trillion in debt. He said no one was expecting the "devastating" cuts to come to fruition.
He said the sequestration "incentive" has not been enough for Congress to get a deal done.
"I think the president has failed to actually bring people together to get a deal done," McDonnell said. "So now you're about 70 days away from the most significant defense cuts, perhaps since the end of the second world war, going into effect."
Allen said a plan to avert sequestration passed by the GOP-controlled House in May was a 'start.' That plan, sponsored by Republican vice presidential nominee and U.S. Rep. Paul Ryan is a cuts-only approach that takes military cuts off the table at the expense of social safety net programs.
"It wasn't perfect, but it's a start,' Allen said. What has the Senate done. Nothing, absolutely nothing."
Allen said the Democratically-controlled Senate should pass its own plan to avoid the cuts, and then work out a final deal with the House.
Allen said then a longer term approach should be used to deal with the nations budget problems. This includes repealing the Affordable Care Act; lowering the corporate tax rate from 35 percent to 20 percent and closing tax loopholes that allow some companies to pay essentially no taxes; curtailing government spending; reforming the tax code; and increasing production of domestic coal, oil and natural gas resources -- including drilling for natural gas and oil off Virginia's coast.
He accused his opponent former Gov. Tim Kaine and Democrats of using sequestration as an excuse to raise taxes. Allen criticized Kaine for supporting the deal that set the cuts in place.
Kaine, for reasons similar to McDonnell, did support the debt-ceiling deal. He has offered a three-pronged plan for staving off the sequestration cuts that includes both cuts and raising revenue.
Kaine advocates letting the Bush-era tax cuts expire for incomes over $500,000; ending subsidies to the biggest oil companies; and allowing the government to negotiate the price of prescription drugs for Medicare recipients. He has also proposed between $2 and $3 in cuts for every $1dollar in revenue increases.
"Gov. Kaine has laid out a middle of the road approach that both parties can agree on to avert these harmful cuts," said Kaine campaign spokeswoman Lily Adams. "Hampton Roads can't afford more gridlock from George Allen that jeopardizes our national defense and the economic success of contractors who need certainty to grow their businesses."
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