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If the United States Congress fails to address the expiration of $600 billion worth of tax breaks and jobless benefits by the end of this year, the economy could shrink as much as 4 percentage points in the first half of 2013, according to Goldman Sachs.
As the U.S. moves closer to this so-called “Fiscal Cliff,” government spending in key areas, like defense, will be the focus of the financial debate. If a compromise cannot be reached, the Federal Government could face automatic across-the-board cuts that will come into effect at the beginning of next year.
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Documents from the Department of Defense show that since 2001, contracts for services have increased by 137 percent, while the payroll for active duty military personnel over the same period has increased by only a single percent. Further increases for payroll have been deemed “increasingly unaffordable” by the department.
Approximately 170,000 government contractors were awarded $536.8 billion for their services in 2011, according to data from USASpending.gov. The site was established in 2006 by the U.S. Office of Budget Management to make federal awards publicly available.
Among the largest government contractors, which develop robotics, research cures for cancer, and design combat aircraft, are several of the largest companies in the country, some of which employ more than 100,000 workers and draw a majority of their revenue from government sources.
Lockheed Martin (NYSE:LMT) tops the list of largest government contractors; in 2011, the company received $39.98 billion in contracts and reported total revenue of $46.30 billion. The Maryland-based company is followed by Boeing (NYSE:BA), with $21.45 billion in contracts, and naval equipment manufacturer General Dynamics (NYSE:GD), with $19.47 billion.
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