Avionics News December 2012 - 32

NOMINAL DOLLARS
Entitlement Spending Non-Defense Discretionary Spending $26.1 trillion $11.3 trillion
$171 billion $322 billion Total Spending, 2013-2021 Budget Authority Cuts due to sequestration

POINT OF COMMUNICATION
Continued from page 4

Defense Spending $5.3 trillion
$492 billion

of balancing a budget. We review the AEA budget monthly and then again twice a year with all members of the board of directors. As you know, if a business does not balance its budget, it’s not in business very long. For the U.S. government, it’s a little more complicated, but the reality is the interest on the federal debt takes up more and more of the budget. The government spends more than it takes in, and it borrows or prints money to make up the difference. The largest portion of the U.S. budget is comprised of entitlement programs. Some political leaders have suggested a cut in Defense spending and raising taxes on the wealthy to solve the problem. However, this would not have much impact on the bottom line, and deficit spending would continue into the future. Under one possible scenario, income tax rates could rise as high as 88 percent on the upper bracket, 63 percent on the middle bracket, 25 percent on the lower bracket and 88 percent on corporations. But, many corporations are small businesses that employ many members of the workforce. This scenario would be disastrous, not only to the general aviation industry, but to overall economic growth. The nation is faced with a challenging problem. No single program or group wants to take a budget cut, and it’s politically unpopular for elected officials to make the difficult choices necessary to properly address the issue. Do Americans want to end up like Greece, for example? In 2011, the U.S. debt was 67 percent of gross domestic product, compared to 3 percent in 2000. The U.S. is not alone. In 2011, the UK (73 percent), Italy (100 percent), Japan (131 percent) and Greece
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Net Interest $3.6 trillion
$169 billion

SHARE OF TOTAL SEQUESTRATION CUTS 14.8 % 27.9 % 42.6 %
Defense Spending

14.6 %
Net Interest

Entitlement Non-Defense Spending Discretionary Spending

*Source: Congressional Budget Office – Chart from heritage.org.

(153 percent) all reported levels of debt higher than the U.S. Spain was not far behind at 56 percent. Without reform, by 2035, the U.S. debt is estimated to be 187 percent of GDP. Again, in the end, what does it really mean? Does the government need to skip a few trips to Starbucks? How will steep budget cuts affect the GA industry and national security in the future? It is a subject not to be taken lightly, as it affects jobs and the livelihoods of people in the U.S. and around the globe. With sequestration looming, it is estimated that the FAA, which is part of the non-Defense discretionary spending, would be hit with a $1 billion dollar reduction annually during the next nine years. While the exact structure of the cuts is not yet clear, many have put together scenarios to demonstrate the economic impact these cuts will have on the civil aviation industry and the national economy. My grandmother lived during the Great Depression, and up until the day she died, she lived a frugal life. She rarely threw anything away and always found other uses for what she had. The impact of the Great

Depression had lifelong effects on her. Does our generation want to repeat the harsh economic times of the Great Depression and watch our children and grandchildren pick up the pieces? The nation’s financial picture can only play a shell game for so long before the problem is pushed to the next generation. There have been many unsuccessful efforts in the past that were laced with sound bites appearing to address the nation’s financial problems, but each was a temporary Band-Aid. Tampered and limited sequestration will not solve the budget crisis, and it unfairly reduces the budgets of many programs. Regardless of who won the election last month, we need leaders willing to tackle the tough issues facing the nation and our global economy. q

JEANNE RAU-FLATTERY Treasurer, AEA board of directors Millennium International and Aero Express Inc.

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http://www.heritage.org

Avionics News December 2012

Table of Contents for the Digital Edition of Avionics News December 2012