Capitol Hill and the Pentagon are at an impasse on how to fix the dire fiscal situation facing the department under sequestration, with no viable end in sight.
Military leaders are facing "difficult and hot-button issues, if you will, with Congress right now," Donley told reporters at the Pentagon.
"I don't think we have a consensus with Congress ... on how to do [deal with] that and what the choices will be," he added.
From potential base closures to a reduction in health and retirement benefits, Pentagon leaders are working multiple, politically distasteful options to reduce the impact of those across-the-board budget cuts.
The Defense Department is preparing to cut $41 billion in 2013, and its 2014 budget request could get slashed by another $52 billion if the sequester is not eliminated.
For its part, the Air Force has already grounded 17 squadrons and severely cut back on critical training missions to pay for their end of sequestration.
But in the end, if Congress does not grant the Air Force and the rest of the services the fiscal leeway on base closures and benefits, it could deal a crippling blow to the air service.
"It's that strategic approach that we'll just absolutely have to develop in concert with the Congress. And if we fail to do that, we're really running the risk of a hollow military," Donley said.
On base closures alone, Donley estimates that the Air Force can do away with nearly 20 percent of its installations to save service dollars.
But Congress's continued blockage of any closures under the Base Realignment and Closure commission prevents the Air Force and other services from taking advantage of those savings.
"[If] that continues with sequestration for the next decade, we'll have more excess capacity and probably a smaller Air Force and, therefore, excess capacity," Donley added.
Aside from base closures, should sequestration continues into future defense bills, the Air Force and the rest of the Pentagon will be forced to "fight on foot on every single individual [budget] issue that will come up," creating uncertainty for the future force, according to the outgoing Air Force secretary.
"That's what will happen every single year. We'll fight on these individual issues. We'll move hundreds of millions this way, that way. We'll stop this. We'll start something we didn't plan on," he added.
"We'll be blocked from making important changes that we think need to be made. And those things will produce a hollow military," Donley said.