Panetta: ‘Cloud of sequestration’ remains

Congress prevented the worst possible outcome for the Pentagon with its “fiscal cliff” deal by delaying across-the-board spending cuts, but the “cloud of sequestration remains,” Defense Secretary Leon Panetta said Wednesday.

Panetta issued a statement Wednesday urging Congress to eliminate the threat of sequestration by passing balanced deficit reduction, after the fiscal-cliff deal delayed the across-the-board spending cuts to the Pentagon for two months.

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That leaves the possibility that the Pentagon cuts in 2013 could take effect, which Panetta and others say would be “devastating” to the military and lead to a hollow force.

“Congress has prevented the worst possible outcome by delaying sequestration for two months. Unfortunately, the cloud of sequestration remains,” Panetta said. “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,” Panetta said.

Panetta said that 800,000 civilian DOD employees would receive notice of possible furloughs if sequester took effect, affecting nearly the entire Pentagon civilian workforce.

Pentagon press secretary George Little said the furloughs could be as much as 22 days per employee, carried out on a rotating basis. Asked Wednesday why the Pentagon preferred furloughs to laying off a small number of workers, Little said, “We are not going to try and punish [the workforce] because Congress cannot do its job." 

The 60-day sequester delay means that the Pentagon would now face at least a $42 billion cut in 2013 if sequestration occurs, down from $55 billion, according to Todd Harrison, a budget analyst at the Center for Strategic and Budgetary Assessments.

There could also be an additional $5 billion cut in order to get the Pentagon budget under the Budget Control Act caps.

In his statement, Panetta thanked both Republicans and Democrats for agreeing to temporarily avert sequestration. “Hopefully, this will allow additional time to develop a balanced deficit reduction plan that would permanently prevent these arbitrary cuts,” he said.

— Carlo Munoz contributed.