Pentagon Begins Planning for $500B in ‘Fiscal Cliff’ Cuts

The Pentagon has started to plan for the half-trillion dollars in automatic cuts over the next decade that it could face as part of the “fiscal cliff” that would start in the new year.

The Office of Management and Budget (OMB) had provided guidance that the Pentagon should conduct “internal planning” for sequestration cuts, Pentagon spokesman George Little told reporters this morning.

Sequestration is the term used to describe the automatic defense budget cuts totaling about $500 billion over the next 10 years that would be triggered in early January. The sequestration cuts were agreed to as part of last year’s debt ceiling agreement that resulted in the Budget Control Act.  It is one component of the coming “fiscal cliff” of spending cuts and tax increases that would be triggered in 2013 that has dominated the political debate in Washington since the presidential election.

For most of the year, Pentagon officials have said repeatedly that they would not plan for potential sequestration cuts because they hoped it would just be done away with by the Congress. Defense Secretary Leon Panetta has been vocal about what he has called the “devastating” impact of the automatic cuts if they were triggered. He once referred to it as a “goofy, meat-axe approach” to reducing spending.

Eventually, any resolution of the pending sequestration cuts were delayed until after the presidential election.

Now, with the deadline looming, the Pentagon has been authorized to look at what programs might be cut.

“We don’t want to go off the fiscal cliff, but in consultation with OMB we think that it is prudent at this stage to begin at least some limited internal planning,” said Little.

A a preliminary review began earlier this week to determine what would be impacted by cuts that will trim 9.4 percent from Defense Department programs, Little said. The review will prevent implementing sequestration in “an absurd way” within the Pentagon, he added.

The estimated $500 billion in cuts over the next decade would be in addition to the administration’s already planned cut of $487 billion over the next decade that it said was guided by a strategic review.  $55 billion in defense cuts would be triggered in 2013.

On July 31, the Obama administration issued a memo announcing that military personnel payroll costs would not be affected by sequestration cuts.  At the time, it acknowledged, “it is recognized that this action would increase the sequester in other defense programs,” namely in civilian personnel costs and weapons programs.

Little said he was activating a public affairs task force that would help communicate to the DOD’s 3 million military and civilian employees about the latest updates on any potential cuts.

Though sequestration could begin on Jan. 3, 2013, Little said, its impact would not be felt immediately on the workforce. The Pentagon would have a phased-in approach to the cuts that would likely be implemented in the months after that date should no deal be reached to avoid sequestration.