The executive branch has options for dealing with the potential “sequestration” cuts, which could lead to $1 trillion in long-term reductions to Pentagon plans, beyond making across-the-board cuts to all defense programs, an analyst said.
The sequestration cuts come as a result of the failure of a “super committee” of lawmakers to craft a plan last year to cut the federal deficit by an added $1.2 trillion. Under the Budget Control Act of 2011, if Congress could not agree to such a plan last year, the sequestration process would trigger $1.2 trillion in longterm cuts starting in January 2013, with half coming from the Pentagon. The roughly $500 billion in defense cuts would be in addition to a $487 billion reduction to the Pentagon’s 10-year spending plans already approved by the law.
Todd Harrison, the senior fellow for defense budget studies at the Center for Strategic and Budgetary Assessments (CSBA), told reporters yesterday the presidential administration–whichever one is in place following the November elections–has at least four options for dealing with sequestration cuts.
Those reductions will start next January unless lawmakers craft a plan this year to prevent them. Republicans in the House and Senate have crafted plans–not greeted well by Democrats–to prevent the first year of sequestration cuts by shrinking the federal workforce. The Pentagon and White House don’t support the sequestration cuts, said they haven’t planned for them, and didn’t include them in the FY ’13 budget proposal. President Barack Obama wants lawmakers to go back to work and craft a big-picture deficit-cutting plan this year.
If the sequestration cuts go through, Harrison said during a budget briefing at his think tank’s Washington office, the administration’s first option is to “do nothing.”
“You get these untargeted, across-the-board cuts; it would be about 10 percent of every account in the defense budget,” he said. While the administration could exempt the military personnel account, doing that would lead to larger percentage cuts to other areas.
“This is messy and arguably the least-desirable option,” he said. Some acquisition programs would “break” under such funding cuts, he said.
“If you’re planning to buy two Virginia-class subs, and now you’ve got 10, 15 percent less money to do it, you can’t buy the two,” he said.
Another option is for the administration to craft an amended budget request for FY ’13 that fits under the sequestration amounts. That would amount to a $472 billion defense budget for FY ’13, Harrison said.
“It’s still going to be painful; you’re still taking the cut,” he said. “But at least if you do this, you have the ability to target the cuts. It’s not a uniform, across-the-board cut. You can cut some accounts more deeply so that you can protect other accounts.”
Doing this would likely mean the Pentagon would have to revise its strategy so it knows how to prioritize those cuts, he said.
Another option for working under the sequestration cuts is to “pad” the Overseas Contingency Operations (OCO) budget for war-related spending, which is not subject to sequestration cuts.
“That basically helps you avoid the abruptness of the cuts that would occur under sequestration,” by making up for funding cut from the base defense budget in OCO funding.
Such a move would be controversial on Capitol Hill. Under President Barack Obama, the Pentagon has moved away from funding base spending options in its war budgets, and many lawmakers support this shift.
Harrison called padding the OCO budget “a short-term solution at best.”
“It obviously requires the cooperation of Congress, because they’ve got to enact these larger war budgets, and it’s going to be obvious what you’re doing,” he said. “And it does violate the spirit of, if not the letter, of the law, because you are increasing your deficit beyond what it would have been otherwise.”
A fourth option for the Pentagon to work under sequestration is to backload the cuts, Harrison said. The Pentagon could achieve the roughly $1 trillion in cuts over the next decade by bringing the defense budget down at a real rate of 2.2 percent annually in a gradual sloping decline.
This move, though, would require a modification of the Budget Control Act.
“You would need Congress to go along with this, but it still achieves the same level of deficit reduction,” Harrison said.
He urged the Pentagon to consider its sequestration options, “if they haven’t already.”
“I’d like to be optimistic…and think that Congress will find some sort of grand compromise and they’ll be able to avoid (sequestration), at least as it’s currently written” Harrison said. “But the best chance for that to happen was actually the super committee.”