“We have no idea what . . . is going to happen,” Panetta told reporters. “We simply cannot sit back now and not be prepared for the worst.”
Panetta said he did not know how much the precautionary cuts would save, but that the Pentagon could not afford to wait. If lawmakers and the White House fail to act by March 1, the Defense Department would have seven months to erase the $52 billion from its current budget because the fiscal year ends Sept. 30.
He said the armed forces would exempt combat operations in Afghanistan — which are largely funded by a separate war budget — as well as pay and benefits for the troops. To compensate, however, cuts would have to bite deeper for other programs, such as ship maintenance, military training programs and the purchase of new weapons.
The Pentagon had largely resisted making plans for the “fiscal cliff.” Defense officials had simply stated that such an outcome would be financially disastrous for the military and wanted to avoid the impression that it could be absorbed in stride.
Panetta said he previously assumed that the potential cutbacks were “so nuts that it wouldn’t happen,” but that now he frets they could become a reality. “Frankly, my fear in talking to members of Congress is that this issue may now be in a very difficult place.”
Congress and President Obama agreed that they would have to automatically cut $110 billion in domestic and military spending this year unless they came up with another deficit-reduction plan.
The original deadline was Jan. 1, but lawmakers and the White House pushed that back to March 1 after frantically negotiating an interim agreement and major income tax increase over the New Year’s holiday weekend.
A memo released Thursday by the Pentagon instructs the armed forces and defense agencies to curtail spending on training, travel, office expenses and conferences. It also gives officials the authority to fire temporary workers.
The hiring freeze alone could have a significant impact on the economy in the Washington region. The Defense Department employs about 800,000 civilians worldwide, but many are concentrated locally.
Also Thursday, Panetta said he met one-on-one for an hour at the Pentagon with Afghan President Hamid Karzai, who is visiting Washington for talks on the future of the U.S.-led military mission in his country. U.S. and Afghan officials are negotiating over how many U.S. and NATO troops might remain after 2014, when most combat operations are scheduled to end.
The Pentagon has proposed keeping up to 10,000 U.S. troops to help train Afghan forces and conduct counterterrorism operations. But White House officials have pressed for fewer. On Tuesday, Ben Rhodes, deputy national security adviser for strategic communication, told reporters that one option would be to pull out all U.S. troops after next year — a suggestion that induced heartburn among many senior military leaders.
Panetta and Gen. Martin Dempsey, chairman of the Joint Chiefs of Staff, did not respond directly when asked Thursday at a news conference if they saw complete withdrawal as realistic.
“We’ve said from the start that no option is entirely off the table,” Dempsey replied. “I’m not prepared to say anything other than that.”
Lisa Rein contributed to this report.