Sequestration 'Puts People in a Lousy Position'

Ashton Carter
Ashton Carter

Military pay and benefits would be protected in the near term if automatic federal budget restrictions took effect next year, but probably not beyond that, a top defense official told Congress Wednesday.

Deputy Secretary of Defense Ashton Carter confirmed to an unusually rancorous hearing of the House Armed Services Committee that President Obama would use his power to exempt military personnel from so-called sequestration, if it happens, for the fiscal year that begins Oct. 1.

"But in the longer run, over the course of the next 10 years, particularly as we absorb the $487 billion [in reduced growth] we've already absorbed, [military personnel] will be taken into consideration," Carter acknowledged.

He said the Pentagon had already decided to "at least minimize" involuntary separations for the 100,000 service members set to leave active duty over the next six years, and exempting the military personnel budget from a potential sequester was part of "making the best of a bad situation."

At issue is some $500 billion in Pentagon budget growth that would automatically be "sequestered" on Jan. 2 unless Congress averts it. The threat of the across-the-board restrictions was supposed to prod last year's "super committee" to agree on $1.2 trillion in federal deficit reduction, but it didn't work. Under the law passed by Congress and signed by President Obama, almost every budget account would shrink automatically.

Congressional defense advocates, Pentagon officials and the defense industry have spent months wailing about what they've called the dire consequences of sequestration, including mass unemployment, furloughed Pentagon workers, and the permanent loss of key defense vendors. Wednesday's hearing was billed as an attempt by the committee to hear how the Obama administration would implement the restrictions, but it often devolved into partisan sniping.

Democrats, led by Obama, insist on a "balanced" solution to the U.S. debt problem, one that pairs reduced federal spending with what they call new "revenues," or taxes. Republicans refuse, insisting the U.S. already taxes and spends too much. This fundamental disagreement is what prevented a deal last year and which continued to roil lawmakers on Wednesday.

One after another, Republicans took shots at Jeffrey Zients, acting director of the Office of Management and Budget, for the Democratically-controlled Senate's failure to pass a budget, or Obama's insistence on higher taxes for the wealthiest Americans. He fired back, reminding lawmakers that they had drafted and passed the bill creating sequester and that the U.S. had its back to the wall last year over the raising of its debt ceiling.

Zients also reminded lawmakers that five months remain before the Jan. 2 deadline.

"I would suggest our energy, our time, is much better spent through deficit reduction than trying to massage numbers we all agree will have a devastating effect on defense and domestic programs," he said.

But as evidenced by the bitter tone of Wednesday's hearing, Republicans and Democrats aren't ready to actually compromise. Even though defense advocates have said they want to deal with the sequester immediately, the most likely scenario has the full Congress tackling it after Election Day, when it must also decide what to do about the expiring Bush-era tax cuts and other important business.

Both parties hope the November election will give their side a mandate, and at the very least, Congress could agree to postpone the imposition of sequester for another year.  That would pass the ball forward to the newly elected Congress seated in 2013 – and potentially, a new president – which, the thinking goes, would have a clear signal from voters on how to proceed.

The problem, defense industry leaders say, is the uncertainty today of not knowing how or whether the government will act. That effectively means the sequester is already having ill effects, said committee chairman Rep. Buck McKeon, a California Republican, since business must be conservative and assume their contracts will be scaled back.

Carter agreed, adding that uniformed troops, Defense Department employees and their families also are biting their nails as Congress bickers over what to do. "The underlying issue here is we have a lot of people who depend on us to behave in a more or less predictable way, and this puts them in a lousy position, this prospective situation," he said. "We've got to head this off."

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