Sequestration’s second year worse than its first, military chiefs warn

The chiefs of the Army, Navy, Air Force and Marine Corps returned to Capitol Hill Thursday with a message they’ve been delivering to the same audience for two years: Sequestration is a terrible idea. But the second year of the automatic cuts, they warned, would be significantly more damaging than the first.

If Congress doesn’t pass a budget and eliminate the sequestration caps, the service chiefs warned the Army will have to reduce its overall size by 18 percent over the next seven years and inactivate almost half of its active brigade combat teams. By the end of 2014, 85 percent of all brigades will fall below minimum readiness levels.

The Air Force will cut back its 2014 flying hours by 15 percent, remove satellites from service and once again cancel major training exercises. The Navy would cancel the planned procurement of several ships and stop construction on its newest aircraft carrier, delaying its delivery date by two years. And the Marine Corps would shrink to 174,000 service members.

“Under sequestration, we will effectively lose a marine division’s worth of combat power,” said Gen. James Amos, the Marine Corps commandant. “This is a Marine Corps that would deploy to a major fight, and not return until the war was over. We will empty the entire bench. Marines who joined the Corps during that war would likely go straight from the drill field to the battlefield without the benefit of pre- combat training. We will have fewer forces arriving less-trained, arriving later to the fight … this is a formula for more American casualties.”

Advertisement

All four service chiefs told the Senate Armed Services Committee that the pain caused by the spending caps would be more acute in 2014 than in sequestration’s first year, since DoD used several one-off approaches to blunt the impacts of the cuts during their first year, such as draining some programs’ contingency funds to pay for current needs.

Also, the services each had some unexpended 2012 money that could be applied to offset the 2013 cuts. In the case of the Air Force, for example, those unobligated funds covered about a quarter of the service’s sequestration bill in 2013. But that buffer won’t be available this year. Virtually all of 2013’s appropriations have already been spent.

“We were 99.8 percent obligated at the end of ’13,” Amos said. “Now there’s no money to bring over. Our account is dry. We’re gonna live with what we have, and we’ve taken measures in the past to lean the force. Civilian hiring was frozen two years ago. We’ve already gone through our travel accounts. We’ve taken our reserves off of active duty to reduce the (temporarily assigned duty) costs. We’ve done all that. There’s really no more fat on our bones.”

Also, the services delayed certain programs and deferred paying certain bills into 2014 in the hope that Congress would have abated sequestration by then. It has not, and those bills still have to be paid.

The services took similar steps with the training of military troops and the maintenance of equipment, deferring many activities into 2014 in the faint hope that Congress would create a “get well” plan for military readiness.

It did not, nor did it pass a budget for 2014. So the Defense Department is now operating under the assumption that it will continue to live under a continuing resolution, plus sequestration, for the indefinite future.

“We start on a CR that is roughly, just in our operating and maintenance account, $500 million less than we had programmed for ’14,” said Gen. Mark Welsh, the Air Force’s chief of staff. “And the program didn’t include the funding required to recover the readiness that we set aside last year. We are behind the power curve, and dropping farther behind the power curve.

As in 2013, readiness and modernization are the two major areas of the military budget the service chiefs are concerned most about. They are the most vulnerable during the first few years of the decade-long budget caps, because significant reductions in military and civilian personnel costs would require a years-long downsizing process.

Because of that, Adm. Jonathan Greenert, the chief of naval operations, said it’s already clear that his service won’t be able to meet the demands of combatant commanders in 2014. The Navy, he said, has only one carrier strike group and one amphibious ready group ready to respond in case something goes wrong in the world.

“Our covenant with the combatant commanders is to have at least two carrier strike groups and two amphibious groups deployed and to have another three, of each, in or around the continental United States ready to respond to a crisis on short notice,” he said. “So, for example, right now we have one carrier strike group deployed in both the Arabian Gulf and in the Western Pacific. And our one response carrier strike group, the Nimitz, is in the Eastern Mediterranean. So consequently, because of fiscal limitations and the situation we’re in we don’t have another strike group trained and ready to respond on short notice in case of a contingency. We’re tapped out.”

On the readiness of the Navy’s equipment, Greenert says the service will have to continue to cancel aircraft and ship maintenance this year.

“This will inevitably lead to reduced life in our ship and aircraft,” he said. “Ashore, we will conduct only safety essential renovation of facilities, further increasing the large backlog in that area. We’ll be compelled to keep a hiring freeze in place for most of our civilian positions, and that will further degrade the distribution of skill, experience and the balance in the civilian workforce, which is so critical.”

Greenert says the Navy would also have to cancel several major planned procurements if Congress doesn’t reprogram about $100 million into its acquisition accounts by January.

“We’ll lose a Virginia-class submarine, a littoral combat ship and an afloat forward staging base,” he said. “The [U.S.S. Gerald R. Ford], we need to finish that carrier, and by spring we stop work on it, which is not very smart, because it’s almost done.”

It’s a similar story in the Air Force, Welsh said.

“While we hope to build a viable plan to slow the growth of personnel costs over time and to reduce infrastructure costs when able, the only way to pay the full sequestration bill is by reducing force structure, readiness and modernization,” he said. “Over the next five years, the Air Force could be forced to cut up to 25,000 airmen and up to 550 aircraft, which is about 9 percent of our inventory. To achieve the necessary cost savings in aircraft force structure, we’ll be forced to divest entire fleets of aircraft. We can’t do it by cutting a few aircraft from each fleet.”

Gen. Ray Odierno, the Army Chief of Staff, said in 2013, his service had to defer more than $700 million of equipment maintenance costs into 2014 and 2015. The Army now has 172 aircrafts sitting idle waiting for maintenance, and no clear way to pay for it.

The Army also was forced to severely curtail soldier training, and Odierno says many of those missed opportunities aren’t recoverable.

“As we scrambled in 2013 to come up with the dollars to meet our sequestration marks, there’s things we did that, frankly, mortgaged our future,” he said. “We stopped training. You can’t ever recapture that. So what that does, it delays the build-up of future readiness. So we will have to pay that price somewhere down the road, because we simply cannot ever get that back. We were able to do it for one year, but it comes at a risk — if we have a contingency, will our forces be ready? And that’s really an incredible risk that I am definitely not comfortable with. The second piece is we’ve had to furlough individuals who’ve worked for this government. And, frankly, they’re beginning to lose faith in their government. Those are temporary measures that we do not want to revisit again. We have to have more permanent solutions.”

If sequestration was intended as a mechanism to save the government money, there are abundant examples in which it’s had the opposite effect, the military leaders said. DoD will pay cancellation fees from terminated contracts and pay higher unit costs for fewer vehicles, ships and airplanes.

Amos said the Marine Corps has begun to estimate the magnitude of those higher costs.

“Just in Marine aviation alone, it’s going to cost me $6.5 billion of inefficiency,” he said. “And that’s because of multi-year contracts I either can’t sign or I’ve got to cancel, so I have to pay penalties, and buy airplanes on an individual basis. At the end of that, that’s four [Joint Strike Fighter] squadrons and two MV-22 Osprey squadrons, simply because of the inefficient way we’re going about doing business in this sequester.”

The Air Force’s Welsh said he believes DoD could find ways to absorb the entire 10-year, $500 billion tab from sequestration, as long as the reductions can be phased in more gradually.

“The mechanism of sequestration is a horrible business model,” he said. “No successful business would try and downsize its product line or its cost doing it this way. They would determine what kind of savings you needed over the time period, you’d use the beginning of that time period to close product lines, reinvest the capital or the manpower or the force structure saved into the successful product lines you wanted to continue, restructure your organization, and then create savings at the back end of this…. This mechanism that makes us take big chunks of money the first two years is what is putting us into this readiness versus modernization dilemma. The overall cost of sequestration reduces our capability and capacity over time, but it doesn’t break us. The mechanism is what breaks us. If we had the trust available to believe that the department would return $1.3 trillion over 10 years, and we could show you a plan of how to do that, eliminating this abrupt nature of the mechanism at the front end, would be a much, much more sensible approach.”

RELATED STORIES:

Navy running out of options to reduce the pain of sequestration in 2014, beyond

DoD research, acquisition face double whammy from sequestration

Hagel lays out options for dealing with sequestration beyond 2014