The House passed the FY2013 defense appropriations bill (H.R. 5856) yesterday, approving $606 billion — a core budget of $518 billion plus $88 billion for Overseas Contingency Operations including the war in Afghanistan.

The total for the core budget is $1.1 billion less than what the Republican leadership wanted.   Many House Republicans are seeking to exempt defense spending from budget cuts and want to add money above the President’s request despite their fervor to reduce the deficit. House Democrats largely support the President’s position that defense must shoulder its share of budget cuts along with non-defense programs.  Politico called Republican support for cutting the $1.1 billion from what their Republican colleagues initially sought “a modest but still important turning point in the budget wars.”

Congress continues to wrangle over how to deal with government funding for FY2013 and deficit reduction in general.  

Discretionary government spending remains under threat of substantial cuts on January 2, 2013 according to the terms of last year’s Budget Control Act (BCA).  Referred to as a “sequester,” if Congress does not change that law or reach a compromise on how to reduce government spending by $1.2 trillion over the next 9 years, an approximately 8 percent cut will go into effect for all government agencies categorized as discretionary spending, including defense, NASA, NOAA and most other government agencies familiar to the public.  The estimated $109 billion in cuts would be split equally between defense and non-defense spending and implemented on an across-the-board basis.  Often called a “meat axe” approach to budget cutting, that means every discretionary government activity would be cut by that percentage rather than allowing agencies to prioritize which programs are most important and allocating funding accordingly.  The cuts also would have to be absorbed within 9 months instead of 12, since FY2013 will already be 3 months old by then.

Mandatory government programs including Social Security and Medicare, as well as veterans benefits, would not be affected by the sequester, although a 2 percent cut to Medicare payments to physicians is part of the package.

The sequester was included in the BCA as a “poison pill” to force Congress to reach a compromise on reducing the deficit on the premise that its effect would be so dire that Congress would do anything to avoid it.  That did not work.  Republicans remain intransigent that deficit reduction be accomplished through spending cuts alone, while Democrats remain intransigent that tax increases must be part of the solution.  White House officials say the impact of a sequester would be catastrophic to the nation’s economy and insist that Congress must find a solution.  

The Aerospace Industries Association (AIA) has been hammering home in many venues what a sequester would mean to the aerospace industry.  Most recently, it released a report from George Mason University (GMU) on the expected economic impact of the sequester on the country.  The report does not contain specific numbers for how much DOD or NASA or NOAA would be cut or how many aerospace industry jobs specifically might be lost, but concludes that it would cost 2.14 million jobs overall.  AIA President Marion Blakey stated that the report shows “sequestration is not just a defense problem, it’s an American problem” and called upon “our leaders in Washington” to fix it.

At a House Armed Services Committee (HASC) hearing this week, Lockheed Martin President Robert Stevens, Pratt & Whitney President David Hess (who also is chairman of AIA), EADS North America Chairman and CEO Sean O’Keefe, and Williams-Pyro President Della Williams warned about the impact of the sequester on their defense-related businesses.  Stevens said the impact would be “devastating” and the “very prospect of sequestration is already having a chilling effect on the industry.”  He gave a “seat of the pants” estimate that Lockheed Martin might have to lay off 10,000 workers, but stressed that he had no idea which workers they might be since he has no details on what programs would be cut by how much.  He and other witnesses stressed that companies must comply with the Worker Adjustment and Retraining Notification (WARN) Act to provide 60 days advance notice of plant closings or mass layoffs, so must know very soon what to expect.  Otherwise those notices will have to be sent even though Congress ultimately might reach a deal to avert the sequester.

FY2013 begins on October 1 and despite House passage of the defense appropriations bill, final action on that and the other 11 appropriations bills is unlikely before then.  Conventional wisdom is that agreement on FY2013 appropriations and deficit reduction will have to wait until a lame-duck session after the November 6 elections to see who wins the House, Senate and White House.   Typically agencies are funded by Continuing Resolutions (CRs) at their previous year’s levels until agreement is reached.  In a politically charged environment amid sharp disagreement on where and how much to cut, a rancorous standoff over a potential government shutdown this fall is a definite possibility.

Some conservative House Republicans reportedly are sufficiently opposed to a shutdown standoff for fear of political backlash, and to a lame duck session at all, that they are suggesting passage of a 6-month CR to kick FY2013 funding decisions into next spring.  House and Senate Republicans and Democrats and the White House agreed to cap government spending at $1.047 trillion for FY2013 in the BCA last year, but House Republicans reneged on that agreement in March, passing a Budget Resolution setting a lower cap of $1.028 trillion instead.  To get agreement on a 6-month CR, these concerned House Republicans apparently are now willing to support the $1.047 trillion figure instead of their lower cap at least for the duration of the CR.   What would happen after that is anyone’s guess.

For that reason, a 6-month CR is not good news for government agencies.  A Damoclean sword would hang over their FY2013 spending plans until final agreement was reached in spring, half way through the fiscal year, adding yet more uncertainty.

Michael Listner, a lawyer, humorously urged the space community yesterday not to follow Shakespeare’s advice to “kill all the lawyers.”  Recounting a litany of thorny legal issues that may arise as collisions in space become more likely and flights into space of ordinary citizens on commercial vehicles become commonplace, for example, space lawyers will be needed more than ever.

Listner spoke at the unveiling of the 2012 Space Security Index (SSI) by the Secure World Foundation (SWF) and Canada’s Project Ploughshares at the Canadian Embassy in Washington, D.C.    This year’s edition of the SSI, the ninth in the series, summarizes key developments in civil and military space during 2011, including international efforts to assure space sustainability.  The latter include progress in the European-led effort to create a Code of Conduct for Outer Space Activities and United Nations-led discussions at the newly formed Group of Governmental Experts (GGE) under the aegis of the U.N.’s First Committee as well as working groups under the U.N. Committee on Peaceful Uses of Outer Space (COPUOS).

Cesar Jaramillo, project manager for the SSI report, reminded the audience of how space security is defined for purposes of the annual report: “the secure and sustainable access to, and use of, space and freedom from space-based threats.”   He reported that nine countries now have indigenous space launch capabilities and the barriers to entry for other countries to join the space club are decreasing.  Although there are more than 165 dedicated military satellites in orbit today, about half of which belong to the United States and another 25 percent to Russia, none are space-based weapons, he said, emphasizing that no space-based weapons have ever been launched to date.

Other speakers focused on significant developments over the past year in civil, commercial, and national security space.  Carissa Christensen of The Tauri Group revealed that her company is close to releasing a study on the suborbital launch market that it prepared for the Federal Aviation Administration (FAA) and Space Florida.  It concludes that there is “real demand” for flights by “leisure travelers” on suborbital vehicles at the price point of $100,000-200,000, noting that the term “space tourist” has fallen out of fashion.  She added that the study does not look at the business plans for the various companies building such vehicles, however, so apparently does not comment on how many companies can be supported by the expected market.  Another growth area for space endeavors is nano- and micro-satellites, she said, with the possible launch of as many as 100 satellites weighing less than 15 kilograms in the next decade mostly for governments and universities.

Implementation of the five pillars of the National Security Space Strategy has been the focus of the U.S. national security space sector since the release of the strategy in early 2011 according to Audrey Schaffer of the Office of the Deputy Assistant Secretary of Defense for Space Policy.  She also noted progress on the international front in Space Situational Awareness (SSA), with bilateral “statements of principles” signed with Australia, Canada and France in addition to progress at the GGE and COPUOS.   The U.S.-Canada agreement includes Canada sharing SSA data from its upcoming Sapphire mission with the United States, for example.  The two countries have cooperated in the area of aerospace warning and control through the bi-national North American Aerospace Defense Command (NORAD) since 1958.

The potential of U.S-China space cooperation was another topic discussed yesterday.   In response to a question from panel moderator Victoria Samson, Director of SWF’s Washington office, Schaffer disagreed with Samson’s assumption that any such cooperation is years away because of the current politically “toxic environment.”   Schaffer pointed out that the United States provided SSA support to China for its recent Shenzhou 9 mission and that counts as cooperation.  Jaramillo agreed, adding that the U.S. Joint Space Operations Center (JSPoC) notifies China of potential conjunctions (collisions) with space debris.  (U.S. government officials have highlighted in other venues that JSPoC lets China know when debris from China’s 2007 antisatellite test poses a threat to Chinese satellites.)  The Obama Administration favors at least a dialogue with China about space cooperation, but influential members of Congress, including Rep. Frank Wolf (R-VA), who chairs the appropriations subcommittee that funds NASA and the White House Office of Science and Technology Policy (OSTP), vehemently oppose it.

As for the importance of lawyers for resolving legal and regulatory questions in the years ahead, Listner, a consultant with Space Law and Policy Solutions in New Hampshire, cited several examples:  potential legal claims from collisions in space or the reentry of satellites such as 2011’s UARS, ROSAT and Phobos-Grunt; whether passengers on commercial spaceflights are entitled to the “privileges” accorded to astronauts under the 1968 treaty that governs the rescue and return of astronauts; defining the terms “space” and “space debris” — noting that the media refer to asteroids as space debris, for example; determining when a nation “expressly abandons ownership” of a space object as capabilities are developed to remove debris — however it is defined — from orbit since “there are no salvage rights akin to maritime law” in space; and, broadly, whether the current body of space law adequately addresses commercial space activities at all.

The Executive Summary of the 2012 Space Security Index, along with several fact sheets on specific issues covered in the report, are available on SWF’s website.   SWF also usually posts audio recordings and powerpoint presentations from meetings like this, so may be available in the days ahead.