Defense Faces Uphill Battle Against Sequester

Just as the Senate was about to pass a funding bill to end the government shutdown Oct. 16, former Defense Secretary Leon Panetta called on the Pentagon to keep up the fight against the sequester.

Panetta was running the Defense Department when sequestration turned from a hypothetical to reality. He famously called the sequester a “goofy meat ax” that would gut military capabilities and weaken the nation.

Even though the White House and Democrats in Congress who oppose the sequester agreed to a budget deal that keeps the spending cuts in place, there is still a chance that the upcoming budget conference will scale back the draconian cuts, Panetta said. “My hope is that, once you get into a budget conference and deal with the bigger issues, the decisions will help debt reduction but also end sequester.”

Sequestration has “wreaked havoc” on the military, Panetta said at a  news event organized by Fix the Debt, an advocacy group.

The upcoming budget conference — to be led by Rep. Paul Ryan, R-Wisc., and Sen. Patty Murray, D-Wash. — has a Dec. 13 deadline to propose a way forward. It will need to “put everything on the table” and find a way to bring stability to the federal budget, Panetta said. “They need to lay out a path for entitlements, taxes and discretionary spending.”

The sequester, which Congress passed during the 2011 debt-ceiling showdown, cuts $1.2 trillion from federal agencies’ budgets across the board. The 2013 trigger went into effect March 1. The next one is coming up Jan. 15, the same day the government runs out of funding and faces yet another fiscal cliff.

The budget deal signed Oct. 16 provides discretionary funding of about $986 billion for all federal agencies. If the Budget Control Act that mandates sequestration is not changed, spending for fiscal year 2014 would fall to $967 billion. The bad news for defense: If the current funding measure, known as continuing resolution, stays in place, the Defense Department would have to absorb the entire cut.

The Pentagon has been playing catch-up with sequester, as it had assumed it would never happen and did not prepare for it. It only has a few weeks to get ready for the next wave. Republican lawmakers have proposed giving the Pentagon greater authority to manage sequester cuts within the spending caps, but that is not enough, said Panetta. “Instead of playing with ideas on how you create flexibility so you can move money around within the bounds of sequestration, I would rather they deal with the bigger issues and de-trigger sequestration.”

Defense industry leaders, meanwhile, are making a renewed push against sequestration.

“Although sequestration will continue until at least mid-January under the new funding law, the budget conference committee offers another chance to replace sequestration with a more sensible approach to resolving our fiscal imbalance,” Lawrence P. Farrell, president and CEO of the National Defense Industrial Association, and its chairman Sean O’Keefe wrote Oct. 17 in aletter to the chairs of the budget and appropriations committees.

“For the Department of Defense, which depends on its ability to budget for future plans, sequestration undermines the programming process with mindless across-the-board cuts,” Farrell said. “For industry, sequestration creates deep uncertainty over program spending levels. When government acquisition professionals do not know their own programs’ future outlays, it is impossible for industry to adapt.”

While some argue that sequestration is valuable leverage to force budget discipline, he said, “It does not meaningfully impact the imbalance between outlays and revenues, nor does it address the long-term drivers of that imbalance.” Whatever level of discretionary spending the conference committee adopts, Farrell said, “spending bills must provide certainty and flexibility. Sequestration makes both impossible.”

Defense Secretary Chuck Hagel said the Pentagon is “planning for every eventuality” but is still operating under a cloud of fiscal unknowns even after the shutdown ended. “The shadow of uncertainty hasn’t been removed,” Hagel said Oct. 17 at a Pentagon news conference. Under the current funding measure, no new programs can be started and sequestration remains the law of the land. Asked whether he believes an agreement can be reached to end sequester, Hagel said, “That is part of the uncertainty.”

Topics: Defense Department, DOD Budget, DOD Leadership, Government Policy