Otherwise, on Jan. 2 the government must begin imposing the first of 10 years of across-the-board reductions in discretionary spending accounts for defense ($500 billion) and non-defense ($700 billion).
For the Pentagon, that would be in addition to the $487 billion reduction already built into the next 10 years. The impact, according to Defense Secretary Leon Panetta, would be “devastating.” Deputy Defense Secretary Ash Carter last week called it the equivalent of “assisted suicide for the DoD [Defense Department].”
Just how bad would it be? One-quarter of Defense’s fiscal 2013 budget will already have been spent and the required additional $50 billion in cuts for the rest of the fiscal year would be much deeper. They would be even worse if the president exempts military pay, which is one-third of core Pentagon spending.
That prospect hung in the air Thursday, when 300 defense industry representatives, investors and journalists heard Rep. Adam Smith (D-Wash.), the ranking minority member on the House Armed Services Committee, tell them, “A good chunk of Congress is in denial about the deficit.”
The same applies to the rest of the country.
Although Smith added, “We have to avoid sequester” and was “confident it would never happen,” he could not predict what was going to prevent it. He painted a grim picture.
There would be a “stalemate if you can’t get tax cuts,” he said, and if a suitable compromise is not found, Democrats will just “allow some of the Bush tax cuts to expire,” which would help offset the $1.2 trillion. Smith finally predicted that if anything was to be approved to head off sequestration, it “has to happen during a lame-duck session” following the Nov. 6 presidential and congressional elections.
After lawmakers appeared at the day-long 2012 Credit Suisse/McAleese and Associates-sponsored Pentagon Conference, 11 senior Defense civilian and military officials paraded to the podium. Led by Carter and including Navy Secretary Ray Mabus, Defense Comptroller Robert Hale, and Air Force Chief of Staff Gen. Norton Schwartz, each one mentioned or was asked about sequestration. No one said they thought it would occur, though none knew what would stop it.
Carter, as Panetta told Congress earlier, said the Defense Department has yet to plan for sequester. The department was awaiting instructions from the Office of Management and Budget (OMB) which Carter said he expected to come “this summer.” Meanwhile, he said OMB and Pentagon lawyers are studying whether the across-the-board reductions will be applied to broad accounts, such as shipbuilding, or equally to each program, such as the new carrier, CVN-78, the USS Gerald R. Ford.