The defense industry is awakening to the reality that the sequestration provisions of the Budget Control Act may actually be triggered in January. If Congress fails to compromise on a way of heading off sequestration, then the Pentagon’s base budget — already shrinking due to other provisions in the law — would be cut by $55 billion more in 2013 and each of the following eight years. Analysts say that would be the biggest one-year decline in military outlays since the end of the Korean War 60 years ago. As if that were not bad enough for the industry, the law permits the president to exempt military personnel from the effects of sequestration by taking more money out of other categories of military spending, and that’s what he’ll probably do. But in the accounts where the cuts are actually applied, the law specifies each program, project and activity must be reduced at the same uniform rate. The result could be chaos. I have written a commentary for Forbes that you can read here.
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