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Budget cuts loom with sequester uncertainty

DOD working to manage spending for next decade

American Forces Press Service

Published: 01:42PM January 17th, 2013
130110-D-BW835-386

Erin A. Kirk-Cuomo

Secretary of Defense Leon E. Panetta and chairman of the Joint Chiefs of Staff, General Martin Dempsey, brief the press at the Pentagon, Jan. 10, 2013. Panetta and Dempsey went in depth on the drastic effects of sequestration should it take effect at the end of March.

WASHINGTON – The “perfect storm of budget uncertainty” howling around his department is the biggest immediate threat facing the U.S. military, Defense Secretary Leon E. Panetta told reporters Jan. 10.

The U.S. has adversaries around the world, Panetta said, “but the most immediate threat to our ability to achieve our mission is fiscal uncertainty: not knowing what our budget will be; not knowing if our budget will be drastically cut; and not knowing whether the strategy that we put in place can survive.”

Panetta emphasized that DOD “is doing its part” by implementing over the next decade the $487 billion spending reduction set by Congress.

“We designed a strategy; we know what the elements of that strategy are; we built a budget based on that, and we achieved our savings by virtue of that strategy,” he said.

But the additional half-trillion-dollar “meat-axe cuts” a sequester would trigger still loom “less than 50 days away,” the secretary said.

“While we appreciate ... that both parties came together to delay sequester, the unfortunate thing is sequester itself, and the sequester threat, (was) not removed,” Panetta said. “And the prospect ... is undermining our ability to responsibly manage this department.”

Two other fiscal crises are he said:

• Because Congress didn’t approve an appropriations act for fiscal 2013, DOD has been operating under a continuing resolution and will do so at least through March 27. The continuing resolution funds operations at fiscal 2012 levels, instead of the higher proposed fiscal 2013 levels Pentagon officials had anticipated.

• The debt-ceiling crisis, Panetta said, “could create even further turmoil that could impact on our budget and our economy.”

Looking at all three factors, the secretary said simply, “We have no idea what the hell is going to happen.” But DOD leaders do know that the worst-case scenario would mean “serious harm” to military readiness, he said.

Panetta noted defense strategy places the highest priority on operations and maintenance funding as the key to a ready force. He described the triple threat facing those funds:

• If Congress fails to pass an appropriations bill for fiscal 2013 and instead extends the continuing resolution through the fiscal year, “overall operating accounts would decrease by about 5 percent ... about $11 billion that would come out of (operations and maintenance funds).”

• If sequester occurs, “We would have to cut, in this fiscal year, another 9 percent, almost $18 billion from ... these operating accounts as well.”

• To protect funding for the war in Afghanistan from required cuts, “We would again have to cut another 5 percent, another $11 billion, from readiness money available in the active-duty base budget, and more for the Army and the Marine Corps.”

Panetta summed up: “We’re looking at a 19 to 20 percent reduction in the base budget operating dollars for active units, including a cut of what looks like almost 30 percent for the Army.”

The secretary said practical results of these cuts would be less training for units not imminently deploying to Afghanistan; less shipboard training for all but the highest priority missions; less pilot training and fewer flight hours; curtailed ship maintenance and disruption to research and weapons modernization programs.

Civilian employees would also take a hit, he said: unpaid layoffs, which the government calls furloughs, would put civilian employees temporarily out of work. This “would further harm our readiness, and create hardship on them and their families,” Panetta noted.

A plan is in place to implement such layoffs if sequester happens, the secretary said. “This action is strictly precautionary,” he said. “I want to make that clear: It’s precautionary. But I have an obligation to ... let Congress know that we may have to do that, and I very much hope that we will not have to furlough anyone. But we’ve got to be prepared to do that if we face this situation.”

Panetta said the net result of sequester under a continuing resolution would be “what I said we should not do with the defense budget, which is to hollow out the defense force of this nation.” Rather than let that happen, Panetta said, DOD leaders have decided to take steps to minimize the damage that would follow Congressional inaction.

“We still have an obligation to protect this country,” the secretary said. “So for that reason, I’ve asked the military services and the other components to immediately begin implementing prudent measures that will help mitigate our budget risk.”

Panetta said he has directed any actions taken “must be reversible to the extent feasible and must minimize harmful effects on readiness. We really have no choice but to prepare for the worst.” First steps to containing budget risk will include cutting back on facility maintenance, freezing civilian hiring and delaying some contract awards, the secretary said.

Panetta has also directed the services to develop detailed plans for how they will implement sequester-triggered cuts, if required, he said, “because there will be so little time to respond in the current fiscal year. I mean, we’re almost halfway through the fiscal year.”

The secretary said the intensive planning effort now under way will ensure the military is prepared to accomplish its core missions.

“I want to emphasize, however, that ... no amount of planning that we do can fully offset the harm that would result from sequestration, if that happens,” he said.

Congress must pass a balanced deficit reduction plan, de-trigger sequester, and pass the appropriations bills for fiscal 2013, he said.

“I’m committed to do whatever I can in the time I have remaining [in office] to try to work with the Congress to ... resolve these issues,” Panetta said. “We have a vital mission to perform, one that the American people expect and that they are entitled to, which is to protect their safety and to protect our national security. Congress must be a partner in that mission. I’d love to be able to do this alone, but I can’t.”

General Martin E. Dempsey, chairman of the Joint Chiefs of Staff offered his view of what wreckage the fiscal “storm” would leave behind.

“As I’ve said before, sequestration is a self-inflicted wound on national security,” the chairman said. “It’s an irresponsible way to manage our nation’s defense. It cuts blindly, and it cuts bluntly. It compounds risk, and it ... compromises readiness. In fact, readiness is what’s now in jeopardy. We’re on the brink of creating a hollow force, the very thing we said we must avoid.”

Dempsey said sequestration may now “hit” while the department, under a continuing resolution, is also implementing “the deep cuts already made in the Budget Control Act” and fighting a war in Afghanistan. “Any one of these would be a serious challenge on its own,” Dempsey said. “Together, they set the conditions for readiness to pass a tipping point as early as March.”

DOD won’t shortchange those in combat, and will resource those who are next to deploy while still caring for wounded warriors and their families, the chairman said.

“But for the rest of the force, operations, maintenance and training will be gutted,” Dempsey said. “We’ll ground aircraft, return ships to port, and sharply curtail training across the force. ... (We) may be forced to furlough civilians at the expense of maintenance and even health care. We’ll be unable to reset the force following a decade of war.”

Military readiness will begin to erode immediately, Dempsey said, telling reporters, “Within months, we’ll be less prepared. Within a year, we’ll be unprepared.”

The crisis “can and must be avoided, the sooner, the better,” the chairman said.

“We need budget certainty; we need time to absorb the budget reductions; we need the flexibility to manage those reductions across the entire budget,” he said. “We have none of these things right now. Without them, we have no choice but to steel ourselves for the consequences.”