Troops and Pentagon civilians face fall from "fiscal cliff"
January 1st, 2013
12:01 AM ET

Troops and Pentagon civilians face fall from "fiscal cliff"

By Mike Mount

Hundreds of thousands of Defense Department civilian employees could receive mandatory unpaid leave notices now that the U.S. government has gone over the fiscal cliff while uniformed troops would be shielded from pay cuts and layoffs for a year, defense officials said.

Congress missed its midnight Monday deadline to avert the automatic tax increases and spending cuts that comprise the cliff, but there was a possibility the situation could be resolved on Tuesday.

Still, if there is no resolution and heavy military and domestic spending cuts take effect, the Defense Department has plans to “issue notices to 800,000 civilian employees of the department that furloughs are almost certain to occur," a senior Pentagon official said.

Defense officials said not all of those employees would be hit by furloughs, if they do occur, but they would all have to be notified that there was a possibility they may have to stop work at some point.

The Pentagon's share of budget cuts under the fiscal cliff would be $500 billion – about half the government-wide total – over the next decade.

Defense Secretary Leon Panetta has tried to ease fears of massive cuts immediately.

"These cuts, while significant and harmful to our collective mission as an agency, would not necessarily require immediate reductions in spending," Panetta said in a memo to Defense Department employees last week.

Panetta tried to reassure the troops that President Barack Obama “indicated his intent to exercise his legal authority to exempt military personnel" from any mandatory cuts.

Troops would be protected through the end of the current fiscal year next September from pay freezes or reduction in numbers. They would not be protected in the 2014 fiscal year and beyond, according to defense officials.

But Panetta was less reassuring about the possibility of mandatory unpaid leave for the civilian employees.

"Should we have to operate under reduced funding levels for an extended period of time, we may have to consider furloughs or other actions in the future," he said.

While there is no direct timetable when the unpaid leave orders could be issued, a defense official said it would be at least "several months" before any civilian employees would be ordered not to work.

"They (the furlough's) wouldn't happen immediately but would be phased in over time and could mean at least three weeks of furloughs for these personnel," according to the defense official with direct knowledge of Pentagon planning.

The Pentagon has 30 days from when budget cuts take effect on Wednesday to develop a spending plan that would incorporate the mandatory 12% reduction in the remainder of the Pentagon's budget for this fiscal year.

Until the number-crunchers develop that plan, it is unclear exactly how programs will be affected by any cuts, according to defense officials.

The Pentagon does know how it will cover the cost of the ongoing war in Afghanistan. While the cost of that war will be affected by the mandatory cuts, Pentagon officials have said that the $7.5 billion per month cost would be picked up by pulling money from operations and maintenance accounts.

But the officials said doing that would impact just about everything, from cutting the grass at domestic military bases to reducing training and weapons maintenance.

"Those kind of cuts would reduce the readiness of units that could eventually be called up to deploy," according to a defense official with direct knowledge of budget planning.

The cuts for 2013 could also reduce training and exercises with international forces, extend the amount of time it takes for medical reimbursement of military family members, and potentially cut medical benefits for military retirees, according to defense officials.

Other accounts that would be hit include procurement and research accounts, reducing the amount of money available to purchase new weapons systems or to start new development programs.

The defense industry is watching closely as billions of dollars of existing contracts could be affected.

Daniel Stohr, a spokesman for the Aerospace Industries Association which represents hundreds of military contractors, said it was unclear how contracts will be affected over the coming months as the Pentagon works through the sequestration process.

Absent a resolution on taxes and spending, defense officials have said lawmakers could always find a way in coming days to adjust Pentagon funding as members of Congress have said they do not want to see cuts in the defense budget.

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