Both Pentagon and defense industry officials anticipate that the congressional budget impasse may well result in a further round of sequester-related spending cuts in January amounting to $20 billion. In the current negotiations, Democrats want to remove the sequester completely and mix spending cuts with tax increases, while Republicans want to use the sequester to leverage entitlement reform and no tax hikes. "What that means for the defense industry is fairly ominous," said Loren Thompson, a defense analyst at the Lexington Institute. "[T]he cumulative impact is going to become bigger and bigger," he continued.

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