Avionics News May 2013 - 19

BELTWAY BRIEFING
BY JAMES A. HUNTER , Government Relations Director, Arent Fox LLP  jamie.hunter@arentfox.com

Budget Cuts Affecting
FAA Operations and Services
As a result of U.S. President Barack Obama’s and ConObama and Congress can agree upon a long-term budget
gress’ failure to reach a deal to avert automatic budget
plan that mixes targeted spending cuts with additional revcuts, the Federal Aviation Administration, like
enues. This is very unlikely to happen this year,
almost all other federal agencies, began the difas the parties continue to remain far apart on
ficult work of reducing its fiscal year 2013 budbudgetary priorities. For the fiscal year 2014
get by 5 percent beginning March 1. According
budget process, Congress can reallocate funding
to an agency press release, the FAA will slash
between programs without violating the seques$637 million from the remainder of its 2013
tration law. This amounts to a “robbing Peter
budget, which runs through September 30.
to pay Paul” approach, but one that presents an
These across-the-board budget cuts, known
opportunity for agencies like the FAA to make
as sequestration, were mandated in 2011 as part James A. Hunter
recommendations based on its priorities and for
of a deal to raise the federal debt limit and reconstituencies to lobby for additional resources
duce spending. Sequestration was designed to be painful
for theirs, albeit at the expense of other programs since overand so politically untenable that Democrats and Republiall domestic spending will essentially remain flat.
cans would be forced to design an alternative approach to
Tax Reform Process Commences in the House
budget cuts before it was implemented. Although there is
The U.S. House of Representatives Ways and Means
a consensus between the parties that sequestration is bad
Committee announced in February that it has created
public policy – President Obama called it “dumb” earlier
11 bipartisan working groups, comprised of committee
this year – the two parties have not made a serious effort
members, to draft proposals to reform the tax code. Each
to strike a deal to replace it with something else. Many
working group is responsible for a specific sector of the
Republicans, for example, are willing to live with it beeconomy, such as manufacturing and small businesses,
cause it forces the administration to cut spending, which
and has solicited recommendations from businesses and
has been their top priority. Likewise, many Democrats are
the general public. Both President Obama and congrespleased that it cuts defense spending, which they view as
sional Republicans support lowering the corporate tax
excessive, while protecting Social Security, Medicare and
rate from 35 percent to 25 percent, while simultaneously
some social assistance programs.
eliminating loopholes and unnecessary deductions.
Sequestration will affect every aspect of the FAA’s misHowever, there also are significant disagreements. For
sion, including operational responsibilities, such as Part
example, Republicans are proposing to lower federal in145 inspections, product certification and air traffic concome tax rates through similar reforms, while Democrats
trol. The FAA announced it will furlough its employees
want to use the tax reform process to increase federal reveat least one day per pay period, beginning April 7. This
nues. Although the House may very well succeed in bringadds up to at least 11 missed days of work through the end
ing a tax reform bill to the floor for a vote this year, the
of September, which means safety inspectors and other
prospects of passing a bill in the Senate and sending a final
employees will be expected to manage their current (and
bill to the president are dim due to these differences. Still,
future) workload with less time to do it. The reality, howbusinesses and trade groups should be engaged on Capiever, is that this will almost certainly increase wait times
tol Hill since it’s likely that the House will produce a bill,
and delay safety inspections and certifications.
which will serve as a template for a future agreement. 
Sequestration will remain in effect unless President

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Avionics News May 2013

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