Additional US military spending cuts due to take effect in January 2013 would "wreak havoc" on US industry, and could trigger a double-dip recession in the United States, an aerospace trade group said.
Doubling the USD$487 billion in defence spending cuts already planned for the next decade would result in serious consequences for the industry, which contributes 2.2 percent of US gross domestic product and supports more than 3.5 million jobs, said Marion Blakey, who heads the Aerospace Industries Association.
She urged Congress to act quickly to reverse the mandatory across-the-board budget cuts, or "sequestration."
"These blind budget cuts could dismantle a crown jewel of our economy, pushing us into a double-dip recession and stripping America of its global superpower status," Blakey said.
AIA released a new report prepared by Deloitte that Blakey said mapped out the importance of the industry to the US economy and its contribution to technological growth through innovations such as the Internet and nanotechnology.
The report said the industry accounted for 7 percent of exports in 2010, and was the largest net exporting industry in the United States. It said the industry contributed an estimated USD$37.8 billion in taxes to state, local and federal coffers.
Companies are looking to foreign sales, acquisitions and growth in adjacent markets to continue generating profits for shareholders, but a big cut in Pentagon spending could harm company-funded research and development, the report said.
AIA last year commissioned a separate study that concluded further budget cuts could eliminate more than 1 million direct and indirect jobs in the industry.
Defence Secretary Leon Panetta has repeatedly warned that additional cuts beyond the USD$487 billion already required under an August deal between the White House and Congress could damage the country's security.
The Pentagon's fiscal 2013 spending plan calls for a base defence budget of USD$525.4 billion, about USD$5.1 billion less than that approved for 2012. It would cut more than 100,000 troops over five years and slow or cut many weapons purchases.
The budget does not include an additional USD$500 billion in cuts over 10 years that will be required beginning in January 2013 unless Congress takes action to avert them. Those cuts are required because lawmakers failed to reach a deal by the end of 2011 on an extra USD$1.2 trillion in federal spending reductions.
Blakey said across-the-board sequestration threatened funding for NASA space programmes and an effort to upgrade the US air traffic system that dates back to the 1960s.
Boeing chief executive Jim McNerney told a separate news conference on Wednesday that the defence industry realised that some cuts were needed to help reduce the federal deficit but sequestration was "a bridge too far."