The Pentagon starts to manage the defense drawdown.
As I have noted many times over the past three years, we are in a long-term drawdown at the Pentagon; the Department of Defense budget will continue to head south. But for those three years, the DOD has been resisting this notion.
From the Pentagon's point of view, the $487 billion the secretary took out of the FY 2012 10-year projection for defense budgets (which flattened but did not cut the defense budget) is the bottom line; anything else is "doomsday" for the defense strategy he articulated last year and for our national security.
Secretary Panetta continued this hyperbolic rhetoric about defense cuts last Thursday in his joint press conference with Joint Chiefs Chairman Gen. Martin Dempsey.
Panetta warned that "the most immediate threat to our ability to achieve our mission is fiscal uncertainty, not knowing what our budget will be, not knowing if our budget will be drastically cut, and not knowing whether the strategy that we've put in place can survive...All told, this uncertainty, if left unresolved by the Congress, will seriously harm our military readiness."
This politically-intended hyperventilation was accompanied by a memo to the military services the same day from Deputy Defense Secretary Ash Carter asking them to draft plans to cope with lower levels of funding this year.
These spending cuts, Panetta and Carter both said, could result from either the looming sequester or from the extension through the rest of the year of the continuing resolution currently governing the defense budget.
In reality, the Carter memo was the first sign of recognition inside the Pentagon that there is no uncertainty here; a defense drawdown is truly underway. While the rhetoric reeked of hyperbole, the memo looked like exactly what DOD should start doing as the money drifts away. It focuses on one of the Pentagon's most pressing long-term fiscal issues: the bloated (now that Chuck Hagel has koshered the term) "back office" at DOD.
Specifically, the memo asks the services to prepare for lower funding levels by freezing civilian hiring and considering furloughs for up to 22 days for some civilian staff. It asks the services to consider releasing temporary employees and imposing hiring freezes. It also asks the services to cancel maintenance activities at the depots that repair and overhaul military equipment.
It suggests that non-essential training and conference activities be suspended as part of these plans. It also suggests the services curtail travel, maintenance of facilities, and such administrative expenses as supplies, IT, and the ubiquitous Pentagon and military ceremonies.
And it set operational priorities. Protect funding for war operations, wounded warrior programs, readiness, family programs, and activities associated with the Pacific pivot strategy.
Operations is one of the key areas the Pentagon needs to focus on in a drawdown. It eats up about a third of the Pentagon budget, is over-staffed, very difficult to track, and has proven almost impossible to control in the past. And while furloughs would be an appropriate (and likely) short-term response to budget cuts, a longer-term strategy would be to gradually thin the civil service by attrition.
Gee, this sounds familiar. This is not the first time that DOD has had to plan for a short-term funding shortage. In the summer of 1994, with refugee operations ramping up in Goma and an intervention in Haiti in the planning stages, DOD was running out of funds.
In anticipation, we had to do all the things mentioned above, especially in the operations accounts: slow down training, consider furloughs, defer maintenance, slow the speed at which equipment went through the repair depots.
We even had recourse to the famous Feed and Forage Act from Civil War days, allowing the military to spend funds without an appropriation. Then, in the middle of the next budget year, we refilled the pots with appropriated funds, in the middle of an overall defense drawdown.
So it is not a crisis, it is sound contingency planning. And it is an excellent first step toward bringing budget and management discipline to the Pentagon. We are in a drawdown today. Fiscal and planning prudence is a necessary and good thing.
The services might even discover in the process of preparing these plans that there are temporary civilian employees they don't really need, activities that can slow down for good as we come out of Afghanistan, maintenance that can be deferred because it is not needed for a smaller force, and civil service and military positions that are unnecessary (over a third of the active duty military never deploys).
It is a good idea to start with sweeping out the cluttered back office. But the memo barely scratches the surface on the other challenges in a drawdown. It barely mentions contracts. It only says protect procurement if it is directly related to combat operations (sensible) or tied to the Pacific pivot strategy (dangerous, as it tempts the services to call every program part of the pivot).
And for those contracts supposedly endangered by a sequester, it only asks the services to minimize disruption and added costs, which suggests that procurement contracts are not seriously threatened by sequester. That's consistent; sequester would not affect funding already tied to existing contracts. But drawdown planning will have to put hardware choices on the table, a next step that will be confronted in the forthcoming Quadrennial Defense Review.
And the memo does not deal with military personnel issues at all. Active duty forces and their benefits (as well as those for retirees) are untouched by sequester. But this third rail will have to be dealt with in a drawdown, including shrinking the force further (including jobs in the back office), and revisiting the healthcare and retirement systems.
Sequester is not doomsday, as the Carter memo makes clear. There is a lot of room at DOD for this kind of fiscal discipline. With luck and planning, the next secretary can make a silk purse out of the sequester sow's ear.