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Originally published July 18, 2012 at 8:58 PM | Page modified July 19, 2012 at 6:56 AM

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Aerospace industry fears looming defense cut, lack of R&D

Two hearings in Congress on Wednesday looked at how to help American aerospace companies fend off growing competition and how to protect some of those same companies from the impact of big federal budget cuts.

Seattle Times Washington bureau

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WASHINGTON — Sen. Maria Cantwell opened a Senate subcommittee hearing Wednesday afternoon to explore how Boeing and other American aerospace companies can fend off rising competition from China, Brazil, Europe and other global rivals.

But earlier in the day, on the other side of the Capitol, U.S. aerospace executives testified about a more immediate threat from home — the looming $1.2 trillion in automatic federal spending cuts over 10 years that would eliminate scores of defense-related jobs.

The dueling House and Senate hearings offered a real-time view of the ways that Congress sometimes seems to work at cross-purposes.

At a morning hearing before the House Armed Services Committee, the heads of Lockheed Martin, EADS North America and two other defense contractors vented their frustration over the automatic spending cuts that will kick in Jan. 2 unless Congress can agree to an alternative.

One witness, Pratt & Whitney President David Hess, went as far as to suggest that Congress consider raising taxes to minimize budget reductions.

Democrats and Republicans have been deadlocked for a year on how to implement deep cuts that the GOP extracted last summer as part of the debate over raising the federal debt ceiling. The automatic cuts, split evenly between defense and nondefense programs, were intended as a poison pill to spur a bipartisan "supercommittee" — co-led by Sen. Patty Murray, D-Wash. — to forge a more sensible alternative.

But the supercommittee collapsed last November — and the two parties are no closer today on just how to avert the cuts. Republicans are intent on preventing what they call "a catastrophic" hit to the Pentagon's budget. Murray and other Democratic leaders are just as insistent the Pentagon shouldn't be protected without equal consideration for cuts slated for education, housing, environmental and other nondefense programs.

Rep. Adam Smith of Tacoma, the top Democrat on the Armed Services Committee, couldn't resist pointing out that lawmakers who believed they could swiftly slash federal spending without economic consequences were wrongheaded.

"It's that attitude that led us to where we are sitting here today," Smith said. "Government spending matters."

A report commissioned by the Aerospace Industries Association (AIA) and released Tuesday concluded that the cuts would trigger the biggest one-year drop in the gross domestic product, about $215 billion, directly and indirectly. The report also projected that more than 2 million jobs would vanish.

Nonetheless, Smith noted that military spending has doubled since the Sept. 11, 2001, terrorist attacks and warned that the Pentagon will have to adapt to smaller budgets in the years ahead.

Over at the Russell Senate Office Building, Cantwell presided over an Aviation Subcommittee hearing on the federal role in keeping the aerospace industry competitive. The five witnesses listed a litany of concerns.

Stan Sorscher, labor representative for the Boeing engineers union in Seattle, said older aerospace workers are leaving the industry in droves. He urged Congress to invest in "domestic industrial base" to help attract students to aviation fields.

Dan Elwell, vice president of civil aviation for the AIA, the trade group, complained that Congress let expire a corporate tax credit that subsidized about 6 cents of every dollar that large companies spent on research and development. The credit was among a slew of tax credits — including sales-tax deductions for Washington residents — that the bickering Congress did not renew last December.

John Tracy, Boeing's chief technology officer, called the declining federal spending on basic research and lagging education in science and technology a threat to American prowess in aerospace. The National Aeronautics and Space Administration (NASA) would be among the programs hit by budget cuts at the first of the year.

Tracy said federal spending helped him choose his career at age 5.

"I first was inspired to become an engineer because of a NASA flight demonstration program called the X-15," he said. "It was this NASA big-picture thing that young people could see and be inspired by."

Kyung Song: 202-662-7455 or ksong@seattletimes.com

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