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DOD and Fiscal Cliff
December 12, 2012 at 11:52 am #174502
From Foriegn Policy blog:
Flexible Spending Accounts
The OMB’s secret plan on what gets cut in sequestration.
The fiscal cliff looms, at least to some. The defense industry has known for some time that defense budgets are going down; sequester just spurs the contingency actions already underway. But the government has been more reluctant to anticipate the future, near-term or long-term. An almost unreal aura of “hear no evil, see no evil, speak no evil” had overtaken the Obama administration ever since the Super Committee failed a year ago to produce a grand bargain on federal spending and revenues.
Whenever Pentagon officials were asked, they said that no planning was underway. Secretary Panetta repeatedly said that the defense budget the president sent to Congress in February, which provided for a flat budget in real dollars for the next decade, was the minimum DOD needed. Anything else might require revisiting the interim strategy the department issued last year. Sequester would be “doomsday,” a “meat cleaver” that would undermine the strategy and our security. Panetta, Deputy Secretary Ash Carter, and Undersecretary Bob Hale repeatedly said they were doing no planning for the fiscal cliff. They, and other agencies, were waiting for the White House Office of Management and Budget to provide guidance.
But until this week, they did not get it. OMB had not defined what constituted “programs, projects, and activities” (PPA) — the funding for which will be sequestered under the Budget Control Act. It sounds really technical, but it matters. The more granular the definition of what PPA are, the less flexibility DOD (or any other agency) would have to deal with the automatic cuts. For example, if OMB defined PPA as a budget account, like “Air Force Aircraft Procurement,” that would give DOD a lot of flexibility to move funds around to protect specific aircraft, like the new tanker aircraft and the F-35 fighter, and maybe take the hit on trainers or modernization of the B-1 bomber. But if PPA were what the Pentagon calls a “program element,” then each aircraft in that account would have its resources cut 9.4 percent, a lot less flexible option.
So DOD has been lobbying for OMB to define PPA at as high an aggregate level as possible. On December 5, DOD (and the rest of the government) apparently got the answer. No document has been released, as yet. But conversations I have had suggest that what OMB said to DOD will make some people happy and some not so happy. For weapons programs, it seems PPA are likely to be defined as program elements — so there can be no felicitous tradeoffs between tankers and fighters, or ammunition and tanks, or aircraft and ships. Planning has to take the same cut across each program element.
It’s not the end of the world. Within each program there are sub-categories like “spares” and contract terms that include contingency funding, giving program managers some flexibility. A 10 percent cut in funding does not end a program. And, in any case, we’re talking about funding the next set of contracts — sequester does not apply to funds already locked (obligated) into existing contracts. So there will be no immediate “cliff diving” on the contract side, but there will be fewer resources for the next round.
The happier folks may be those responsible for operating the Pentagon — buying the fuel, managing the contracts, doing the planning, maintaining the bases, supplying the forces in Afghanistan, contracting with the guards and cooks at Bagram airfield, delivering training, conducting exercises, or just sailing, driving, or flying around. There, the definition of PPA may provide substantial flexibility, by being set at the account level. In other words, the roughly 10 percent reduction would apply to “Army Operations and Maintenance,” which is an $82 billion account in the FY 2013 Army budget request. While nobody likes losing $8 billion, the Army would at least have the flexibility to move the remaining funds around and, as it were, cut the grass less often at Ft. Belvoir in exchange for supporting the Bagram services contracts.
Sequester is not about closing the government; it’s about cutting back on spending. If I were betting, the impact will most likely be felt by services contractors (the lawn service company) and by folks almost nobody is talking about — the civilian workforce at the Pentagon, some of whom could be taking an involuntary day or two off, without pay.
None of this will happen right away. In fact, although OMB has not said what it will do if there is no budget deal by January 3, one possibility is that it will use its existing authority to tell agencies how fast they can spend their money (apportionment) conveying to them the message: “Keep spending like you were before. We’ll get back to you on sequester when we know what Congress is going to do.” In other words, if OMB anticipates that Congress might reach a deal sooner rather than later, sequestration might be short-lived, even if there’s no agreement by the January 3 deadline.
December 26, 2012 at 9:42 pm #174522
Anything new to add?
December 27, 2012 at 9:52 am #174520
alot of political noise making…
an example would be from Military.com
“Defense analysts have speculated that the defense cuts will be dealt with in the forthcoming agreement if Congress allows the nation to go over the fiscal cliff. U.S. Sen. Carl Levin, chair of the Senate Armed Services Committee, suggested the Pentagon could absorb a $100 billion cut rather than the $500 billion. It’s unclear whether that plan is being discussed, but it has been floating within the national debate.
Work continues on the 2013 defense budget as the conferences completed and settled on spending debates between the House and Senate. However, those budgets could change should the nation plummet off the fiscal cliff. Services will have to make changes to absorb the forthcoming cuts.”
Have seen VERY little from DOD,
December 27, 2012 at 9:56 am #174517
DOD press release from Dec 20(BEFORE discussions stop between White House and Congress)
WASHINGTON, Dec. 20, 2012 – While many remain hopeful that Congress and the administration will reach a deal that avoids sequestration, Defense Secretary Leon E. Panetta has issued a memo describing the potential implications of going over the fiscal cliff.
Planning for the effects of an across-the-board cut in defense spending as part of the Budget Reduction Act of 2011 “is only prudent,” said DOD officials. Under the law, the reductions are due to take place Jan. 2, 2013.
Panetta said it is too early to assess what effects sequestration will have. He did say that it will not affect military personnel or military end strength as President Barack Obama announced his intent to exempt the military personnel accounts from sequestration last summer.
The secretary did clarify the potential implications of sequestration in his memo.
“If it occurs, sequestration will reduce our budgetary resources for the remainder of the fiscal year,” the memo says. “These cuts, while significant and harmful to our collective mission as an agency, would not necessarily require immediate reductions in spending.”
There is no threat of a government shutdown because of sequestration, Panetta said in the memo.
“Everyone will show up for work on January 3, 2013, and continue to drive on,” said Army Lt. Col. Elizabeth Robbins, a Pentagon spokeswoman.
The memo states that there will be no immediate civilian personnel actions such as furloughs.
“Should we have to operate under reduced funding levels for an extended period of time, we may have to consider furloughs or other actions in the future,” Panetta said in the memo. “But let me assure you that we will carefully examine other options to reduce costs within the agency before taking such actions.”
If the department does need to take these actions, affected employees will receive all appropriate notifications, the secretary noted.
The Defense Department is already reducing its budget by $487 billion over 10 years. The Budget Control Act calls for a further $500 billion in cuts at DOD unless Congress and the administration pass a new law averting it.
“Sequestration was never intended to be implemented and there is no reason why both sides should not be able to come together and prevent this scenario,” Panetta wrote.
December 27, 2012 at 2:10 pm #174515
Thanks Henry for this information. We are getting none this to include this memo.
January 8, 2013 at 10:16 am #174513
Statement by Secretary Panetta on Sequestration Delay
“On behalf of the Department of Defense, I want to express our thanks to the Democratic and Republican Members of Congress who voted to temporarily avert sequestration. Hopefully, this will allow additional time to develop a balanced deficit reduction plan that would permanently prevent these arbitrary cuts.
“Had Congress not acted, the Department of Defense — along with other federal agencies — would have been forced to begin taking dramatic steps that would have severely impacted our civilian personnel and disrupted our mission. For more than a year, I have made clear that sequestration would have a devastating impact on the Department. Over the past few weeks, as we were forced to begin preparing to implement this law, my concerns about its damaging effects have only grown. As an example, had Congress failed to act, I would have been required to send out a notice to our 800,000 civilian employees that they could be subject to furlough.
“Congress has prevented the worst possible outcome by delaying sequestration for two months. Unfortunately, the cloud of sequestration remains. The responsibility now is to eliminate it as a threat by enacting balanced deficit reduction. Congress cannot continue to just kick the can down the road.
“This Department is doing its part to help the country address its deficit problem by working to implement $487 billion in spending reductions in accordance with our new defense strategy. The specter of sequestration has cast a shadow over our efforts. We need to have stability in our future budgets. We need to have the resources to effectively execute our strategy, defend the nation, and meet our commitments to troops and their families after more than a decade of war.
“Every day, the men and women of this Department put their lives on the line to protect us all here at home. Those of us in Washington have no greater responsibility than to give them what they need to succeed and to come home safely. My hope is that in the next two months, all of us in the leadership of the nation and the Congress can work together to provide that stability and to prevent sequestration once and for all. Our national security demands no less.”
January 9, 2013 at 11:56 pm #174511
Thanks for the continued updates. We are not getting any information through our chain of command.
January 12, 2013 at 11:43 am #174508
One of several stories regarding memo; this one from DoD Buzz
Defense Secretary Leon Panetta realizes he will have only a short time to find $52 billion worth of savings in the Pentagon’s 2013 budget if Congress fails to reach an agreement by March 1 to eliminate the sequester cuts.
To mitigate some of the damage to military readiness, the Pentagon authorized civilian hiring freezes while instructing managers to devise plans to institute furloughs to civilians for up to 30 calendar days.
“We have no idea what the hell’s going to happen. All told, this uncertainty, if left unresolved by the Congress, will seriously harm our military readiness,” Panetta said.
Deputy Defense Secretary Ashton Carter issued a memo Thursday outlining the near term actions the Pentagon will take in order to prepare for March. Pentagon leaders have changed their tune from one where they denied planning for sequestration to one where it sounds more inevitable than doubtful.
January 12, 2013 at 11:54 am #174506
February 21, 2013 at 1:33 pm #174504
Latest word on Sequestration from DOD
American Forces Press Service
WASHINGTON, Feb. 20, 2013 – With major, across-the-board defense spending cuts scheduled to take effect March 1, Defense Secretary Leon E. Panetta today issued a message to the Defense Department workforce.
Here is the secretary’s message:
For more than a year and a half, the president, the Joint Chiefs of Staff and I have repeatedly voiced our deep concerns over the half a trillion dollars in automatic across-the-board cuts that would be imposed under sequestration and the severe damage that would do both to this department and to our national defense.
The administration continues to work with Congress to reach agreement on a balanced deficit reduction plan to avoid these cuts. Meanwhile, because another trigger for sequestration is approaching on March 1, the department’s leadership has begun extensive planning on how to implement the required spending reductions. Those cuts will be magnified because the department has been forced to operate under a six-month continuing resolution that has already compelled us to take steps to reduce spending.
In the event of sequestration we will do everything we can to be able to continue to perform our core mission of providing for the security of the United States, but there is no mistaking that the rigid nature of the cuts forced upon this department, and their scale, will result in a serious erosion of readiness across the force.
I have also been deeply concerned about the potential direct impact of sequestration on you and your families. We are doing everything possible to limit the worst effects on DoD personnel – but I regret that our flexibility within the law is extremely limited. The president has used his legal authority to exempt military personnel funding from sequestration, but we have no legal authority to exempt civilian personnel funding from reductions. As a result, should sequestration occur and continue for a substantial period, DoD will be forced to place the vast majority of its civilian workforce on administrative furlough.
Today, I notified Congress that furloughs could occur under sequestration. I can assure you that, if we have to implement furloughs, all affected employees will be provided at least 30 days’ notice prior to executing a furlough and your benefits will be protected to the maximum extent possible. We also will work to ensure that furloughs are executed in a consistent and appropriate manner, and we will also continue to engage in discussions with employee unions as appropriate.
Working with your component heads and supervisors, the department’s leaders will continue to keep you informed. As we deal with these difficult issues, I want to thank you for your patience, your hard work, and your continued dedication to our mission of protecting the country.
Our most important asset at the department is our world-class personnel. You are fighting every day to keep our country strong and secure, and rest assured that the leaders of this department will continue to fight with you and for you.
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