"The sky is not going to suddenly fall on Jan. 2. In fact, we are likely to see hardly any impacts in that first week."
WASHINGTON — In the final presidential debate, President Barack Obama declared to the American people with unflinching certainty that sequestration “will not happen.”
Two months later, the Jan. 1 deadline is looming, with no debt reduction deal in sight.
How quickly and deeply will these automatic defense budget cuts totaling about $500 billion over the next decade hit troops, Defense Department civilians and contractors? And how much will they hurt?
Many experts agree: “The sky is not going to suddenly fall on Jan. 2,” said Todd Harrison, a defense budget expert at the Center for Strategic and Budgetary Assessments, a Washington think tank. “In fact, we are likely to see hardly any impacts in that first week.”
But in the weeks that follow, the DOD could begin implementing the furlough plan for civilian employees that was announced before Christmas by Secretary of Defense Leon Panetta.
The Defense Department could hit the entire civilian workforce — about 700,900 full-time employees — with furloughs. In that instance, offices would not be shuttered. Furloughs would come in waves and in a rolling manner, so only a handful of civilian employees from each department would stay home without pay each month.
Harrison expects that by early spring the Defense Department will have to move to reduce its peacetime operations. For example, the number of flight hours that pilots get for regular training and the number of live-fire exercises for ground forces could be reduced. Maintenance of equipment, such as ships and ground vehicles, would be deferred.
Deputy Secretary of Defense Ashton Carter testified to the House Armed Services Committee in August that sequestration would allow for less training for later-deploying Army and Marine Corps units to Afghanistan and would reduce readiness of other units if other conflicts arise.
Troops also could see reductions in base support services, facility and government-owned family housing maintenance and commissary hours, Carter said. They may also see Tricare health coverage affected, with delayed payments to medical service providers. That could cause providers to deny medical services to some retirees and family members, he testified.
Harrison predicts that the first pink slips for layoffs in the defense contracting industry could go out by late spring or early summer. DOD plans to buy different weapons systems could stall, resulting in delayed contract awards and the renegotiation of contracts.
“The ‘cliff’ metaphor is not accurate,” Harrison said. “It’s more like a slope and it will build from the first year, but it won’t be like a government shutdown, where suddenly at midnight, everyone stops there.”
Patrick Lester, director of fiscal policy at OMB Watch, a progressive Washington think tank, tells people not to panic. He argues that based on his nonprofit’s analysis, the politics for a deal being struck is much better in January. “Pain focuses the mind,” he said.
The White House and executive office agencies have some ability to soften sequestration’s harshest impacts — if it kicks in — because the effects won’t come down immediately.
They can offset some of the pain because they have the authority to control the rate of federal spending. They could use carryover funds to help cushion cuts, redirect funds to more urgent activities and accelerate spending to avoid employee furloughs, Lester said.
“But just because they have this management authority, it doesn’t mean they’ll use it,” he said. The White House’s Office of Management and Budget declined to comment when asked whether using that authority would be considered.
The longer a deal goes unresolved, sequestration becomes a more serious issue, forcing more draconian cuts to make up for the entire fiscal year. With nearly one-fourth of the fiscal year already passed, deeper cuts will be needed to make up for rest of the fiscal year.
For instance, Pentagon spokeswoman Lt. Col. Elizabeth Robbins said DOD is looking at a 12 percent cut in funding for all accounts, except for military personnel accounts, after putting off sequestration planning for months.
“It’s too early in the process and it’s too soon to tell the effects on specific activities and programs,” she said.
Jacob Stokes, a research associate at the Center for a New American Security, a Washington think tank with close ties to the Obama administration, said that it’s important to remember that sequestration is “not irreversible.”
For that reason, there’s been a shift in rhetoric from the defense contracting industry. The consensus has moved from a doomsday scenario to reassurances that it’s not going to be as bad as originally thought.
The goal is to reassure financial markets, which experts say could be thrown into turmoil if the country goes off the fiscal cliff.
“It will be a lot like standing on ice that’s breaking,” Lester said. “You can see the cracks breaking around you and eventually you will fall through the ice, so you don’t have unlimited time,” he said. “You can manage sequestration, but every day that passes, that gets harder and harder to do.”
Lester said he believes that Congress and the president will get a deal done.
“The question,” he said, “is when.”