CQ TODAY ONLINE NEWS
June 22, 2012 – 10:50 p.m.
Sequestration Nervousness Grows
By Frank Oliveri, CQ Staff
Defense hawks on and off Capitol Hill are growing increasingly anxious about the prospect of the budget sequester, particularly with the absence of concrete efforts to delay or avert it.
There has been a broad assumption in Washington for months that lawmakers will end up deferring the question of sequester until sometime next year, when the next Congress is in place.
“I guess we’ll straighten that out in November,” House Armed Services Chairman
But with no clear path to any agreement, lawmakers, defense contractors and industry at large are growing unnerved by the increasing possibility that a sequester may indeed take place.
The heightened level of alarm played out on the Senate floor last week on the farm bill (
Republicans demanded a vote on an amendment by
What looked like a run-of-the-mill partisan dispute ended up in something more unusual these days: a bipartisan compromise. By voice vote, the chamber agreed to require the military, the Office of Management and Budget (OMB) and the president to report on the effects of sequester on defense and domestic programs, with short deadlines so lawmakers would have time to consider the implications.
The result reflected both the deep uncertainties over what the sequester — mandated by the bipartisan deficit reduction law (PL 112-25) — would look like, and a sense that new urgency is needed to get lawmakers to the negotiating table.
“We’ve got to create a greater incentive, especially for the leadership in Congress, to actually come to the table,” Rep.
Much Work, Little Time
With pre-election paralysis already setting in, any deal-making is likely to be delayed until the small window of time after the election in November and before Jan. 2, 2013, when the sequester is scheduled to take effect. But there is a growing pileup of subjects that will demand lawmakers’ attention at the end of the year — tax cut extensions and the debt limit, not to mention the fiscal 2013 spending bills.
And there is a growing recognition that the effects of a sequester will start kicking in well before January. Government agencies, for example, are likely to begin throttling back their spending on Oct. 1, the beginning of the new fiscal year, in anticipation of a possible sequester.
The first signs might be proposed layoffs expected to be announced in late summer or early fall, defense policy lawmakers said. The 1988 Worker Adjustment and Retraining Notification Act (PL 100-379) requires 60 days’ notice before mass layoffs.
Sequestration Nervousness Grows
The defense industry is warning that sequester could lead to a million layoffs at production plants across the nation.
The National Association of Manufacturers released a report last week supporting that analysis. “This report makes it clear that these cuts will punish the businesses that create the cutting-edge products keeping us safe at home and abroad, creating a negative effect on the supply chain between large and small manufacturers,” warned association CEO Jay Timmons. “Congress needs to make the tough decisions on spending to address our debt crisis, but these decisions cannot be made at the expense of our economic and national security.”
“I’m always asked in the Congress, ‘Well, have you looked at sequester and tried to plan for it?’ I’ve said, ‘I can’t plan for something that was designed to be crazy,’” Panetta said at an awards dinner last week. “The sequester was designed to be nuts so that it would force the Congress to act to do the right thing.”
He added that lawmakers have privately told him they expect the sequester to be postponed until after the election. “Delay is failure,” Panetta added.
Still, there are a few glimmers of new flexibility on the part of lawmakers when it comes to some kind of grand deal on averting a sequester.
That idea was rejected out of hand by McKeon, who argues that the $490 billion already cut from future defense spending is enough. But other Republicans may be more amenable.
A growing number in the GOP is also signaling new openness to the possibility of raising revenue.
McCain suggested last week there may be ways to raise revenue without violating the GOP’s pledge not to raise taxes. “A lot of these are in the eye of the beholder,” he told a defense conference last week. “So whether they’re tax increases or whether they’re subsidies, a lot of us have been trying to get rid of them for 20 years.”
Another part of Congress’ dysfunction, McCain said, is the dearth of information from the administration on the effects of sequester and how it would be implemented.
Defense industry executives are clamoring for details about how it would occur. OMB, however, has not been forthcoming. The office’s recent confirmation that war spending would be subject to a sequester was an aberration from a pattern of not commenting about how it would unfold.
Sequestration Nervousness Grows
In a sign of the defense industry’s concern, senior executives met June 13 with the acting OMB director, Jeff Zients, to get more information, but sources said no additional guidance was provided. Visiting the administration’s budget director that day were Marion C. Blakey, CEO and president of the Aerospace Industries Association, and three chiefs of major defense corporations: Robert J. Stevens of Lockheed Martin Corp., Wes Bush of Northrop Grumman and David P. Hess of Pratt & Whitney.
McKeon said last week he had invited Zients to appear before his Armed Services panel to address concerns about the sequester’s implementation, but his overtures were rejected.
Top military officials have said little planning is required to implement a sequester. McKeon was unconvinced.
“Do I believe the people in the Pentagon that tell us that they are not planning? Well, that is kind of a dilemma, isn’t it?” McKeon said last week. “It would be nice to assume they always tell us the truth, but it is hard for me to believe the military people I know would just sit on their hands and not plan for this. It is too big a deal.”
He said it was overly simplistic for Deputy Defense Secretary Ashton B. Carter to say the military didn’t have to plan for sequester.
“I hope they were just kind of telling us a little fib, and they really are doing some thinking and some planning,” he said.
John M. Donnelly, Tim Starks and Emily Cadei contributed to this story.