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White House Misses Deadline for Sequestration Report

Sep. 7, 2012 - 01:00PM   |  
By STEPHEN LOSEY and ANDY MEDICI   |   Comments
President Obama is seen during his nomination acceptance speech at the Time Warner Cable Arena in Charlotte, N.C.,, on September 6.
President Obama is seen during his nomination acceptance speech at the Time Warner Cable Arena in Charlotte, N.C.,, on September 6. (Robyn Beck / AFP via GettyImages)
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The Obama administration has missed a key deadline to submit a report on how it would implement $109 billion in across-the-board budget cuts scheduled to take effect Jan. 2.

The administration was supposed to send to Congress by Sept. 6 detailed information on every account that would be affected under sequestration, including how much money would be cut from every program, project and activity level.

But that day, the administration told Federal Times the report will come “late next week.” The administration said it needed more time to address the complex issues involved in planning for sequestration.

Washington is hungry for details on how the government plans to absorb these cuts, which are required by last year’s Budget Control Act unless Congress and the administration agree on a path to reducing budget deficits by $1.2 trillion through 2021. Congress last month passed the Sequestration Transparency Act mandating the report. But there have been few official details released so far.

Frank Kendall, undersecretary of Defense for acquisition, technology and logistics, said at a conference Sept. 5 that the Pentagon would have to cut 11 percent of its budget next year. And the across-the-board nature of these cuts would be “devastating,” he said, and leave the Defense Department with almost no flexibility.

Sequestration “doesn’t allow us to prioritize,” Kendall said, according to a Pentagon release. “It doesn’t allow us to find the things that are least important to us. It doesn’t allow us to avoid some of the damage that will be done by this kind of a mechanism.”

Kendall said any budget-cutting plan the Pentagon could prepare would be irrelevant.

“If we have a budget, there are roughly 2,500 lines in that budget, and we have cut each of them [by] about 11 percent,” Kendall said.

And because sequestration was designed to hit Defense and non-defense agencies’ budgets equally, other agencies also would likely face roughly 11 percent cuts next year.

The cuts would even hit the Pentagon’s war-fighting operations in Afghanistan, Kendall said. And they would be in addition to $487 billion in cuts the department is already making over the next decade.

Obama has said he plans to use what little flexibility exists in the sequestration rules to exempt military personnel from sequestration cuts, which will force the cuts to fall harder on other areas. About 108,000 Defense civilian employees could lose their jobs next year if sequestration takes effect, according to a report last month by the Center for Strategic and Budgetary Assessments.

On Sept. 6, the office of House Speaker John Boehner, R-Ohio, posted a blog asking if Obama would comply with the transparency law and release the report on time.

“The administration has repeatedly ignored requests from Congress for sequester information, even as top officials admit the defense cuts the White House demanded — in an effort to ensure the president wouldn’t face another debt limit vote before the election — would jeopardize our national security,” Boehner’s office said. “Now it’s time for President Obama to obey the law he signed and tell the American people how he plans to implement (or replace) these devastating cuts.”

Job losses, furloughs

All in all, sequestration could lead to 270,000 lost federal jobs throughout the government, and the furloughs of thousands more.

“And that’s just the first installment,” said Doug Criscitello, a former chief financial officer at the Housing and Urban Development Department and current managing director at Grant Thornton. “There’s nine of them [years of cuts]. Imagine taking cuts of that magnitude for nine years [through 2021]. You’d essentially eliminate discretionary spending.”

Stan Collender, a former congressional budget staffer who now works at the public relations firm Qorvis Communications, said procurement, research and development, operations and maintenance will also take steep hits at Defense.

The Pentagon will likely look for any possible flexibility to scale back its contract spending, while avoiding contract breaches that could draw financial penalties, Collender said. That will likely mean a steep reduction in the number or size of new contracts, he said. And if the Pentagon has the option of buying fewer units for certain contracts or not renewing multiyear contracts, he said they will probably take them.

Criscitello said the delay of the report may be a sign that it will be fairly substantive, requiring more work.

But Collender suspects the unfortunate political timing of its due date — the same day as Obama’s speech to the Democratic National Convention — also may have been a factor in the administration’s decision to delay it.

“I don’t think we can discount the fact that the administration probably would prefer this to not come out over this weekend, where it’ll compete with reactions to the convention and the [Sept. 7] unemployment report,” Collender said. “They’d prefer to not have people ask, ‘What about sequestration and the fiscal cliff?’”

All agencies affected

Sequestration will also have a wide-ranging impact on other government agencies and programs.

Ellen Murray, assistant secretary for financial resources at the Health and Human Services Department, said in a letter to Rep. Ed Markey, D-Mass., that the automatic cuts would have “profound consequences” on the department’s ability to provide critical services.

Sequestration would hinder HHS efforts to reduce health care fraud and recover improperly spent money — saving $1.50 for every dollar spent, according to Murray.

Automatic cuts would also force HHS to downsize or cut clients from a variety of programs, including:

• Cutting 100,000 children from its Head Start early education program.

• Cutting 12,150 patients from its AIDS Drug Assistance Program.

• Cutting 169,000 people from substance abuse treatment programs.

These cuts, projected by the Congressional Budget Office, would limit HHS’ ability to fund research programs and would eliminate 2,300 new and competing research grants, according to Murray.

The Food and Drug Administration could also see its budget cut by $200 million — which would mean slower drug approval times, Markey said in a statement.

Jon Adler, national president of the Federal Law Enforcement Officers Association, said the automatic cuts will lead to furloughs, equipment shortfalls and hobble the ability of law enforcement to keep people and property safe.

“Sequestration will inevitably turn our fortified castle into a wavering house of cards,” Adler said in an interview.

Federal law enforcement officers have already been affected by hiring freezes and increased attrition due to budget cuts.

“How does a man or woman who risks their lives for their country get categorized as wasteful government spending?” Adler said.

Bruce Moyer, government relations counsel for the Federal Bar Association, wrote in a blog post that sequestration would impede U.S. Marshals Service efforts to provide adequate security for courthouses across the country.

Sequestration would result in “a significant reduction in court security personnel” and would delay needed upgrades and improvements in courthouse security systems, he wrote.

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