Panetta orders DOD to ‘prepare for the worst’ on sequester, including furloughs

Defense Secretary Leon Panetta on Thursday said the Pentagon would respond to a “perfect storm of fiscal uncertainty” by making plans for furloughs and massive cuts at the Pentagon.

The beginning of budget cuts from sequestration, the looming debate on Capitol Hill over the debt ceiling and a critical vote on the defense appropriations bill for fiscal 2013 are all set to come crashing down on DOD next month, Panetta warned.

"We have no idea what the hell is going to happen," he said.

The secretary and Chairman of the Joint Chiefs of Staff Gen. Martin Dempsey said they have ordered service leaders and combat commanders to begin taking "precautionary" cost-cutting measures in anticipation of sequestration. 

The measures include unpaid furloughs to the department's civilian workforce and near-term reductions to critical DOD accounts that fund operations, training and maintenance of weapons and equipment.

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The sequestration planning from Deputy Defense Secretary Ashton Carter also calls for cuts to major acquisition programs and various research and development efforts that are underway at DOD.

The measures would not affect combat operations in Afghanistan and elsewhere, and are designed to be reversible should Congress somehow come up with a plan to avert sequestration, Panetta said. 

"No amount of planning ... can offset the harm" of sequestration, Panetta said. "We really have no choice but to prepare for the worst." 

The two-month delay in the budget cuts from sequestration that were approved in the “fiscal cliff” deal will expire in March. Unless Congress acts, the Defense Department’s budget for the fiscal year will be slashed by roughly $45 billion.

While DOD officials "appreciated" the breathing room provided by the fiscal-cliff deal, it only prolongs the uncertainty plaguing the department, Panetta said.

The Pentagon is considering delaying delivery of its budget plan for fiscal year 2014, which is due in February, to see if Congress can reach a final deal to avert sequestration. 

But the sequester isn’t the only budgetary headache facing military planners. The fights on Capitol Hill over the debt ceiling and a continuing spending resolution to fund the government are also causing problems.

Should Congress approve a continuing spending resolution to fund the government — a strong possibility — the Pentagon would be forced to continue operating under the spending levels set in 2012. 

The combination of sequestration and an extension of the continuing resolution would force “very sharp cutbacks" to critical DOD operating accounts across the board, Panetta said. 

The "immediate threat ... is fiscal uncertainty," Panetta said, "not knowing if our strategy [that] we have put in place will survive." 

Panetta said lawmakers on both sides of the aisle "must be a partner in this mission" to resolve the budget crisis.    

"I'd love to be able to do this on my own, but I can't."