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While Urging Congress to Avoid Automatic Cuts, Obama Administration Plans for Sequestration

Deputy U.S. Defense Secretary Ashton Carter told lawmakers Wednesday that the Justice Department plans to compile a list of budget accounts it will exempt from reductions, should across-the-board cuts to military spending take effect January 2.

“We will be developing that list,” Carter said. The cuts are mandated by the Budget Control Act of 2011, a law that requires $1.2 trillion in across-the-board cuts be evenly divided between military and non-military discretionary spending. Congress passed the legislation last year after a bipartisan committee, convened with the goal of passing a deficit reduction plan that included spending cuts and tax increases, failed to reach consensus.

Carter said the Department is reviewing the Balanced Budget and Emergency Deficit Control Act of 1985, the predecessor to the BCA, for guidance on which military accounts the president has the authority to exclude from a sequester. President Obama already has said he will exempt military personnel accounts from a reduction.

Carter made these remarks at a standing-room-only congressional hearing convened by the House Armed Services Committee. Chaired by Rep. Buck McKeon (R-Calif.), the committee has called on the Obama administration to detail how it would implement the cuts, specifically within the Department of Defense.

Even as the cuts would impact all government spending, the military industry has captured the attention of lawmakers with warnings that across-the-board cuts would threaten national security as well as lead to industry-wide layoffs.

The sequestration law requires roughly a 10 percent cut on all discretionary spending from fiscal year 2013 through 2021 to reach the longterm goal of reducing the federal deficit.

“Although we strongly believe that Congress should enact a balanced deficit reduction package and avoid sequestration, we have reviewed the law and identified some of the key impacts on some of the Department,” Carter said.

The cuts would have an impact on more than 2,500 programs or projects in the Defense Department. The reductions may lead to less funding for military training, he said.

“As a result, some later-deploying units, including some deploying to Afghanistan, could receive less training, especially in the Army and Marine Corps. Under some circumstances, this reduced training could impact their ability to respond to a new contingency, should one occur,” he said.

Carter also said a sequester could lead to reduced funding for civilian personnel, resulting in unpaid furloughs. Funds for the Defense Health Program, which provides health care for retirees and military dependents, could be reduced. A sequester also would lead to disruptions in military construction products and result in the purchase fewer weapons, he said.

Last month the House and Senate passed bills requiring the Obama administration to detail how it would implement the cuts.

Jeff Zients, Acting and Deputy Director of the Office of Management and Budget, told the committee that there is no way to prepare for the sequester because dollar amounts for the fiscal 2013 budget have yet to be finalized.

“Specific details about percentage reductions and the amount of the reductions by program, project and activity cannot be known at least until Congress enacts appropriations for fiscal year 2013 and finalizes any legislation affecting mandatory programs,” Zients said.

Should a sequester take place, OMB would apply the cuts to all non-exempt accounts equally, Zients said. But he, like Carter, asked Congress to pass deficit reduction legislation.

“The impact of sequestration cannot be lessened with advance planning and executive action. Sequestration is a blunt, indiscriminate instrument designed to force Congressional action on achieving a balanced deficit reduction plan. It is not the responsible way for our nation to achieve deficit reduction,” he said.

Military budget experts project that the Defense Department may be allocated $600 billion for fiscal year 2013, which would result a possible $54 billion reduction.

In response to recent remarks from military contractors indicating an intent to begin sending layoff notices (to comply with a law requiring most employers with 100 or more employees to provide notification 60 calendar days in advance of plant closings and mass layoffs) the Labor Department Tuesday said businesses don’t have to send out such notices because no specifics about the cuts have been announced.

“We don’t want [defense contractors] acting as if sequestration is inevitable,” Carter said in a post-hearing interview with NewsHour correspondent Margaret Warner for a NewsHour segment set to air Thursday. “Giving a blanket scare to everyone is a deleterious affect to something that hasn’t happened yet and shouldn’t happen.”

While Carter said that sequestration would lead to job losses, Armed Services ommittee Chairman McKeon says that the threat of a sequestration already has caused some contractors to trim their staff.

If the sequester were to be implemented January 2nd, cuts, however wouldn’t cause assembly lines to shut down, Carter told the NewsHour.

“This hits this [year’s] appropriation which will affect them about a year later.” Carter said. “The effect of sequestration would phase in over the course of the execution of the fiscal year 2013.”

During the hearing, Zients said he “sympathizes with the defense industry because this puts them in a lousy position.”

“They are our partners in this so we are going to have to work through this together,” Carter said. “We’ll try to do, as we always try to do, the most efficient and rational thing we can, but this is a circumstance that makes that almost impossible.” he said.

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