Why Pentagon won't say how it would cut $55 billion starting Jan. 1

The Pentagon is staring at some $55 billion in spending cuts – 10.5 percent of its annual budget – that it will have to make immediately come January, if Congress does not act before then to avert the "fiscal cliff." Officials there, no fan of these automatic cuts or of the process on Capitol Hill that spawned them, have alternately called this approach to financial discipline a "blind meat ax," a "goofy meat ax," and "fiscal castration." 

In fact, they assert that the impact of the cuts is so grim – and poses such an “unacceptable risk” to America’s national security, as Chairman of the Joint Chiefs of Staff Martin Dempsey has warned – that the Pentagon refuses to even plan for them.

Why, in a building filled with US military commanders who pride themselves on preparing for every contingency, particularly those considered dire, is there such a reluctance to plan – or at least to acknowledge any planning – for severe spending cuts mandated under this Washington budgetary regimen known as sequestration?

One reason is because the Pentagon would then have to show its cards, some argue. That is, it would have to tell Congress how it would reallocate funds from its lesser priorities to its higher priorities, says Todd Harrison, senior fellow for defense budget studies at the Center for Strategic and Budgetary Assessments (CSBA), warned back in August.

“Once you show people there are higher- and lower-priority items in your budget, then the lower-priority items become the target, and they’re likely to get cut no matter what,” he says. Mr. Harrison is one who suggests that the Pentagon “would be wise to start planning.”

There are some hints that may be happening, sub rosa. Earlier this month, one official gave some indication that Pentagon planning for sequestration has at last begun. 

“We get a certain amount of criticism for not planning for sequestration,” said Frank Kendall, undersecretary of Defense for acquisition. “We actually are starting to do some planning.” 

Immediately, official Pentagon spokespeople rushed to clarify his remarks, made to the little-watched Government Contract Management Conference in Washington. “By ‘planning,’ [Kendall] was stating that the department is working closely with [the White House Office of Management and Budget] to understand the law and assess its impacts,” Lt. Col. Elizabeth Robbins said.

Pentagon officials have always maintained that sequestration rules do not leave them much to plan for. 

“The problem is that sequestration, the way the law is written, doesn’t give us an enormous amount of latitude,” Mr. Kendall said at the aforementioned conference. “We essentially have to go into every budget account and maybe every budget line and take the same percentage out of essentially every line. That’s a singularly stupid way to take money out of the Defense Department.”

This indiscriminate approach to cutting is a chief criticism of sequestration. The law does in fact call for across-the-board cuts of about 10 percent to all military accounts. (The two exemptions are for war costs and military salaries.) 

The impact would be immediate. Defense contractors would see a speedy reduction in their contracts, because a Pentagon with less money would have to go back to contractors and renegotiate to buy in smaller quantities. 

In the case of the Virginia Class submarines, the Navy may not have the money to buy two submarines, Harrison offers by way of example. “And you can’t buy 1.8 submarines,” he notes. “So what do you do? You can only buy one sub.”

The cost of producing one submarine, however, will be more than the cost of producing two. (Remember Econ 101 and the lesson on economies of scale?) So the price to the Pentagon for that one submarine will be higher.

“If you have all of this messiness that happens when you have to go out and renegotiate these contracts, the cost goes up,” says Harrison. “Sequestration won’t directly terminate these programs, but having the unit costs go up is going to make the DOD [Department of Defense] reconsider some of these programs.” 

The Pentagon will also have to steel itself for large-scale layoffs under sequestration. Some 791,000 civilians currently work for the DOD (not counting contractors). Roughly 108,000 would need to be furloughed or fired under sequestration.

“That would happen nearly immediately in the days and weeks after sequestration occurs,” says Harrison.

The automatic cuts would shrink spending on fuel, too – a $15 billion-a-year expense for the Pentagon. Spending on fuel for the convoys in Afghanistan wouldn't change, but many peacetime military operations would have to be curtailed. 

The Air Force is the DOD’s largest consumer of fuel, so “what you’d see is a cutback in things like flying hours for planes,” says Harrison. The Navy, in turn, would need to cut steaming hours for its ships, and the Army its tank training exercise. “Arguably, readiness could be degraded,” he adds.

On the bright side, this would mean savings in wear and tear on equipment and maintenance. 

The bottom line, however, is that sequestration “would slow down nearly everything DOD does,” he says. “You would have to defer military construction, training, peacetime operations, maintenance for ships, aircraft, you name it.” 

The good and bad news, Harrison adds, is that sequestration is not meant to be good policy. 

For his part, Kendall at the DOD expressed hope back in August that Congress will act soon to avoid the automatic budget cuts set to go into effect in January – or at least push them back. “I’m expecting in the lame duck [Congress] – you know, not very far away now – that there will be some kind of a deal that would delay sequestration,” he said.

“I don’t know that the lame duck will come back and have some kind of big budget deal that solves all our problems. I’d be surprised by that,” Kendall added. “But I do expect there to be a delay for a few months.”