DOD planning for sequestration in fiscal 2014; can’t rule out force reductions
WASHINGTON — The Pentagon is working out specific plans for reductions in force and involuntary separations in the coming year if budget cuts from sequestration are repeated in 2014, the Defense Department’s No. 2 executive said Wednesday.
No force cuts have been decided on, but a potential $52 billion defense budget cut means DOD officials would once again be thrown into crisis mode, Deputy Defense Secretary Ash Carter said in an interview at the Pentagon to discuss the effect of sequestration on personnel.
While praising the sacrifices of DOD troops and civilians and promising to try to keep their economic pain to a minimum, Carter said the Pentagon’s first responsibility is national defense.
“We can’t rule out RIFs and involuntary separations if there’s sequester in FY14,” he said. “We’re just being completely honest with people …
“We’re going to have to absorb that much budget cut while doing our best to keep this institution with the sharp edge it needs to have to protect us.”
And, Carter added, few in DOD expect an ideologically deadlocked Congress and the president agree to a spending bargain in coming months that eliminates sequestration.
Even if sequestration is avoided, the Pentagon needs to find ways to bring down spending, Carter said. With compensation eating up a larger and larger share of the DOD budget, and the Pentagon is identifying ways to control it.
“There isn’t a soul in this building that thinks anybody in this department is overpaid, but compensation has grown absolutely as a share of the overall defense budget over the last 10 years, and we need to balance that against the other attributes of the force,” he said.
Within several weeks, he said, the Joint Chiefs and senior enlisted members of the military services will deliver recommendations to save $50 billion primarily in pay, health care and housing over a decade, Carter said. Military retirement pay, meanwhile, is being studied by a group mandated by Congress.
The Pentagon has locked horns with Congress on the subject of limiting military pay increases, arguing for a 1 percent raise next year, while the House of Representatives passed a measure to raise pay by 1.8 percent. DOD likewise has sought increases in military retiree health care fees and copays that Congress has rebuffed.
When he rolled out the department’s previously secret planning for budget cuts last week, Defense Secretary Chuck Hagel put a new potential cut on the table — a reduction in the Basic Allowance for Housing.
Any changes to the formula would be “devilishly complicated” because of factors such as housing market fluctuations, but there are several options for cutting, Carter said.
“There can be reductions in rates; we can look at the rates of growth and try to find ways of slowing the rates of growth; we can look at inequalities in the system based on where you live,” he said.
If sequestration continues, Hagel said last week when he presented his “Strategic Choices and Management Review,” DOD might try to end civilian pensions for retired military troops who work for DOD, or cut unemployment payments.
Carter said changes in pensions, health care and other benefits would likely be grandfathered.
Still, a $100 million dollar cut would do damage to DOD and its personnel that officials currently can’t calculate.
“When you get to those larger numbers,” he said, “you’re making changes that are big enough and fast enough that we’re not confident we know what the consequences would be.”