Thinking the Unthinkable

February 9, 2013

THE automatic cuts imposed by Congress’s “sequester” on America’s budget fall heavily on defence, which accounts for at least half of discretionary spending. Faced with 9% across-the-board reductions, Leon Panetta, the outgoing secretary of defence, stalled for time. Thanks to the “fiscal cliff” deal done on January 1st, the administration bought the Pentagon a couple of months for his successor to prepare for the worst. But little else has changed. Add to this the similarly sized cuts in the defence budget already agreed on in 2011, and Pentagon planners who two years ago thought they would have $600 billion to spend this year will now have to make do with about $486 billion. Service chiefs are already wailing about a “readiness crisis” and a “hollowing out” of the force.

The reality is even worse than the figures suggest. Military personnel costs, which absorb 34% of the Pentagon’s spending, count against the overall budget cap but are exempt from the cuts. Overseas operations are not exempt, but will be given priority. All other programmes and commitments will therefore have to be cut by around 15%, with little discretion over how and where the cleaver will fall. Another problem is that “continuing resolution” (CR) funding at 2012 levels could well be extended for six more months on March 27th. Just as the Pentagon rashly hoped that something would turn up to avert sequestration, it also gambled that CR would last for only half the fiscal year.

More Information






NCMA Resources | Advertise | Privacy Policy | Contact Us | Site Map | © 2012 National Contract Management Association