Firms to Boost Forecasts with Budget Deal
Lockheed Martin Corp., the world’s largest defense contractor, and others will probably boost sales forecasts if Congress passes a budget deal that undoes some federal spending cuts.
The Bethesda, Md.-based company, which expects $45 billion in revenue this year, had projected a slight decline in sales next year because of the government’s automatic, across-the-board reductions known as sequestration.
Chief Executive Officer Marillyn Hewson, who yesterday was elected chairman of the board effective Jan. 1, said the company will probably revise the sales forecast if the Senate this week joins the House in passing the two-year budget agreement.
“We had factored sequestration in, so now that we have more input … assuming that the budget gets approved, we’ll have an opportunity to revisit what our outlook is,” she said, according to an article by Andrea Shalal-Esa of Reuters.
The Senate as early as Wednesday is expected to pass the budget accord, which would let federal agencies such as the Defense Department avoid about $62 billion over two years. It would be paid for in part by scaling back pensions for working-age military retirees.
The legislation, known as the Bipartisan Budget Act, was crafted by Rep. Paul Ryan, R-Wis., chairman of the House Budget Committee, and his Senate counterpart, Sen. Patty Murray, D-Wash. It easily passed the House of Representatives last week by a vote of 332–94.
The Pentagon faces about $1 trillion in spending cuts over the next decade as part of 2011 deficit-reduction legislation known as the Budget Control Act. That includes almost $500 billion in reductions already planned and another $500 billion in automatic cuts.
The Ryan-Murray bill would undo some of those reductions.
Of the $62 billion in sequestration relief in the pact, $44 billion would be applied in 2014 and another $18 billion in 2015, according to a cost estimate from the Congressional Budget Office. That means the Pentagon would receive an additional $22 billion in 2014 and another $9 billion the following year, according to the office.
The added federal spending would be offset by raising revenue and cutting costs in other areas of the budget, from increasing security fees for commercial airline passengers to reducing contributions to civilian and military pensions.