In 2011, Congress and the White House entered into a Faustian bargain in order to satisfy the competing demands for raising the debt ceiling and deficit reduction. The Budget Control Act (BCA) of 2011 mandated some $900 billion of cuts over 10 years in exchange for an initial debt limit increase of an equal amount. The Act further established the Joint Select Committee on Deficit Reduction, or “super committee” with the task of finding an additional $1.5 trillion in deficit reduction over ten years by November 23, 2011. The BCA had a poison pill which Democrats and Republicans alike thought would spur the other to compromise on issues such as entitlement reform and tax increases. If Congress would fail to produce a deficit reduction bill with at least $1.2 trillion in cuts, then Congress could grant a $1.2 trillion increase in the debt ceiling but this would trigger across-the-board cuts (“sequestration”) of spending equally split between security and non-security programs. Moreover, the Department of Defense had no choice in how the cuts would be achieved. Every program and line item was required to suffer an equal percentage reduction.
Sequestration has to be one of the stupidest ideas to come out of Washington in decades. The idea that any committee, super or otherwise, could resolve a budget impasse rooted in fundamental philosophical and political differences between the two parties was a silly conceit on the part of the BCA’s creators. Senior defense officials have characterized the impact of sequestration on the military and national security as nothing short of catastrophic. If sequestration is triggered, the brand new defense strategy will have to be scrapped. It turns out that even a threat to national security is not enough to force compromise.
Now we are in an election year. This means that there is no chance to meet the BCA’s demand for deficit reduction. Sequestration will take effect on January 1, 2013 before the President is sworn in and a new Congress seated. More important, sequestration will actually begin to impact the Pentagon well in advance of the January 1 date. The 2013 fiscal year actually begins October 1, 2012. On that date, defense planners, contracting officers and program managers, anticipating the effects of sequestration, will start to withhold resources, slow down procurements and delay hiring contractors or even government personnel. In fact, there are reports that some programs and expenditures are already being changed in anticipation of sequestration.
Defense leaders need to take a pro-active stance in anticipation of sequestration being triggered. If draconian cuts in military forces and programs are to be avoided, the Pentagon needs to take steps to find alternative ways of saving an equivalent amount of money to that required to be cut. There are a number of ways of doing this. Government regulations impose a massive burden on both the defense industrial base and its larger commercial cousin. By at least one estimate, “red tape” adds some 18 percent to the cost of every program. Cutting unnecessary regulations and paperwork could save billions of defense dollars annually. Similarly, opening up protected areas of defense activity such as depot level maintenance to full and fair competition could result in further billions of dollars in cost reductions. Improved contracting procedures and the expanded use of performance-based logistics are additional means of reducing costs.
But implementing regulatory reforms, opening up defense work for competition and changing how contracts are written will take time. So in the interests of national security, I propose not that sequestration be undone, but that Congress and the White House agree to postpone it for one year. This will allow a responsible government to work through a series of defense acquisition reforms that could well provide savings equal to those targeted for reductions by sequestration.
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