Analyst: Sequester is ‘stupid,’ but not ‘apocalypse’ for Defense department

Across-the-board spending cuts would create a “real mess” for the Pentagon, but are not the “apocalypse” that some are suggesting, a leading defense budget analyst said Wednesday.

The Center for Strategic and Budgetary Assessment’s Todd Harrison said that the two-month delay of the sequestration cuts included in the “fiscal-cliff” deal didn’t make the outcome much better or worse for the Pentagon, if the cuts still wind up going into effect on March 1.

By pushing the cuts back two months, defense spending in 2013 would be cut through sequester by about $43 billion — down from $55 billion, Harrison said in a report released Wednesday detailing the impact of sequestration to the Pentagon. 

But the cuts would take place over seven months — instead of nine — before the fiscal year ends in September. That would make their impact more severe in areas like personnel.

As a result, Harrison said that “virtually all” 790,000 DOD civilian employees would have to be furloughed for the maximum amount of time in order to make the required cuts without laying off workers.

“It’s going to create a real mess for DOD,” Harrison told reporters at a briefing on the report Wednesday. “It’s a mess. I think it’s, of course, the result of a lot of really stupid decisions … but it’s not the end of the world, and we’ll survive it if it happens.”

In a lot of ways, Harrison’s briefing felt like déjà vu. He has been making many of the same statements about sequestration in the months leading up to the initial Jan. 2 deadline — CSBA held a budget briefing in August as well for a sequestration report. 

Harrison's biggest takeaways on the sequester had not changed Wednesday: It would throw contracting into disarray over required re-negotiations, it would not hit defense firms immediately, and it would reduce the Pentagon’s purchasing power beyond the amount of the cuts.

Harrison noted that the reason sequestration was such bad policy was not the level of the cuts, but rather the across-the-board manner in which they are to be implemented.

He said that it was possible to achieve the same level of deficit reduction over the next decade by cutting the defense budget 1-to-2 percent every year.

Now the next deadline for sequestration is March 1, which will be occurring around the same time that the debt-limit must be raised to avoid default, and less than a month before the government could be facing shutdown.

He had a PowerPoint presentation graphic depicting all three events with the headline: “March Madness.”

Now that the across-the-board cuts are tied to the debt-ceiling increase rather than the Bush tax rates expiring, Harrison is predicting it’s more likely that Congress actually will allow the cuts to occur.

The Republican demand that every dollar of debt-limit increase be matched by a dollar of spending cuts would make it difficult to find enough deficit reduction to replace sequestration, he said.

“I’m not confident Congress can come up with another $2 trillion in deficit reduction by that deadline,” Harrison said, referring to $1 trillion to replace the sequester and $1 trillion to raise the debt limit.

“Both parties may end up looking at sequestration and say, ‘It’s bad. It’s not what we want — but it’s probably better than any other deal we can negotiate with the other side.”