Saturday, February 28, 2009

Military Contractors Await Details of Obama’s Budget

Families wave flags as the guided-missile cruiser USS Winston Churchill pulls into port at Norfolk, Va., June 4, 2006. Nearly 7,500 sailors returned to their homeports after completing a seven-month deployment with the Harry S Truman Carrier Strike Group to support maritime security operations in the 5th and 6th Fleets areas of responsibility. U.S Navy photo by Petty Officer 2nd Class Pamela M. Coxe

From The New York Times:

The good news for big military contractors from President Obama’s budget this week was his proposal to increase the basic Pentagon budget by 4 percent, to $534 billion.

But now the companies are contending with a new question: what will the priorities of the new administration — which has made clear it wants to shift spending from futuristic weapons systems to simpler arms that troops can use now — mean for the industry?

The big contractors “are sitting on the edge of their seats,” said Gordon Adams, a professor at American University in Washington and an expert on the defense budget.

The defense secretary, Robert M. Gates, said this week that he would probably not decide the fate of some marquee weapons systems — including the Air Force’s supersonic F-22 jet fighter and the Navy’s plans for a new high-tech destroyer — until April.

Read more ....

My Comment: I was surprised by the increase in the proposed U.S. defense budget.I know that the devil will still be in the details, but I had expected a steep drop in funding. The final Defense budget will probably be higher, especially when Congress and lobbyists gets their hands on it and start to position themselves to protect their favorite programs.

Expect an additional $10 - $20 billion increase over the White House proposal when all is done.

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