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Sequestration: What’s Next?

As virtually everyone now knows, the congressional super committee’s abject failure to reach a deficit reduction agreement has triggered “sequestration.” The next question is: Now what?

Sequestration mandates $600 billion in automatic budget cuts over the next decade. This would mean a cut of close to 11 percent of the DoD budget between FY 2012 and FY 2013, according to “Five Facts About Defense and Sequestration,” a report by Todd Harrison of the Center for Strategic and Budgetary Assessment. Thereafter the budget would grow with inflation for the rest of the decade. Funding would fall to about $472 billion in FY 2013, the report states – the approximate level of funding that existed in 2007, adjusted for inflation.

“Under sequestration, the base defense budget would fall 14 percent in real terms from the peak in FY 2010 to FY 2013,” the report continues, although Harrison goes on to explain that this figure does not include war funding, which, if gradually phased out in the coming years, would bring the total reduction in defense spending to more than 30 percent.

However, Harrison writes, the sequestration mechanism won’t be triggered until Jan. 15, 2012, and won’t be enforced – with money actually taken out of accounts – until January 2013. Congress can do a lot of things during that year – an election year – to modify, delay, or nullify the effects of sequestration.

Importantly, war funding is exempt from cuts under sequestration, which is one reason why nearly $10 billion of funding in the base budget was moved to the war budget in the Senate’s markup of the FY 2012 defense appropriations bill, Harrison reports. As referenced in the report and detailed in a The Will and the Wallet blog post, procurement items like the small MQ-1 Raven UAV, LW155 howitzer, .50-caliber M2 machine guns, and mine-protected vehicles have been shifted under the war funding umbrella. Those items are relatively easy to justify as falling under war funding, but moving the Marine Corps’ H-1 program to modernize its Super Cobras and Huey IIs, the Navy’s MQ-8 Fire Scout program, and the HMMWV Recap program under war funding may yet draw some congressional scrutiny.

Harrison also points out that cuts may be more difficult in comparison to the past because earlier drawdowns, such as those following the Korean, Vietnam, and Cold Wars, cut end strength to save money. With a much leaner force today, there is less “fat” to be cut in personnel. However, personnel are much more expensive today than in the past, and Secretary of Defense Leon Panetta specifically mentions personnel twice in his “doomsday” letter to Sen. John McCain. Under sequestration, personnel costs can be exempted from cuts, but that will mean deeper cuts elsewhere.

What will make any cuts especially painful for DoD is that over the past decade, the services failed to significantly modernize, whether due to budget priorities or, more often, program failures. “In total, at least a dozen major acquisition programs were canceled while still in development over the last decade with a sunk cost of some $50 billion in RDT&E funding,” Harrison writes. These programs included the EFV, F-22, DDG-1000, and Future Combat Systems, once considered vital modernization programs for the Marine Corps, Air Force, Navy, and Army, respectively.

And while actual funding for procurement soared nearly 100 percent over the past decade, much of the money went to “one-trick ponies,” like mine-resistant ambush protected (MRAP) vehicles that are too heavy to cross 70 percent of the world’s bridges and first-generation UAVs that are unlikely to survive in a non-permissive environment. These were necessary investments to protect warfighters and more effectively fight an insurgency, but at the same time are likely to have limited utility in the future.

While some members of Congress are already talking about how to avoid sequestration, President Barack Obama has said he will fight any such efforts with the veto. Even if the budget cuts will be limited to those already set to go into effect without sequestration, one thing seems clear: Unless there is a strong analysis of the threats DoD will need to be able to face in the future and a force structure shaped to those threats, each service’s slice of the pie is only going to get smaller, and all of them are going to go hungry.