Obama Exempts Military Personnel From Cuts; Civilian Workers, Weapons At Bigger Risk

The Pentagon

President Barack Obama will protect all accounts used to pay for military personnel from deep spending cuts that would kick in Jan. 2 if lawmakers fail to pass a $1.2 trillion deficit-reduction measure, placing a bulls eye on civilian employees and weapon programs.

The move "is considered to be in the national interest to safeguard the resources to compensate the men and women service to defend our nation and to maintain the force levels required for national security," Obama writes in a July 31 memo sent to congressional leaders.

In that memo, Obama acknowledges "this action would increase the [impact] in other defense programs."

"This presumably means a bigger hit to investment accounts since the Pentagon...needs to cut $55 billion in 2013 if sequester is triggered," says Loren Thompson of the Lexington Institute. In Pentagon parlance, investment accounts is a term used to describe the pools of monies it uses to develop and purchase new planes, helicopters, vehicles, ships, and other pieces of equipment.

[Photo Gallery: Obama Behind the Scenes.]

The reason those civilian personnel and weapons are in trouble comes down to a math problem.

"The formula for this is a uniform-percentage cut across all non-exempt accounts," says Todd Harrison of the Center for Strategic and Budgetary Assessments. "So that $55 billion gets divided among all the various accounts."

And with the health care slice of the pie removed, "the cut would be even greater for weapon programs, operations and maintenance accounts and Defense Department civilian employees," says Harrison.

For those civilian workers, "you could have some of them getting layoff notices before Election Day in November," Harrison says.

The Bipartisan Policy Center, a Washington think tank, has warned that roughly half the Pentagon's annual budget will be subject to the $500 billion, decade-long cut.

In a recent study, BPC found exempting all military personnel benefits spending removes $141 billion from the Pentagon's $729 billion pie of funds to cut.

Obama and lawmakers have yet to make exempt monies used to fund the war in Afghanistan and the broader war on terrorism, but the think tank expects that will happen soon. When it does, that will make another $88 billion safe from cuts.

And then there's another slice of funding that won't be eligible for cuts: Dollars that already will have been sent between Oct. 1 and Jan. 2, when the automatic cuts are slated to kick in. BPC assumes that will be around $125 billion.

That leaves only $374 billion a year from which cuts could be made annually.

If the automatic cuts are allowed to occur, reductions would be made from just about half of the Pentagon's yearly budget.

Pentagon observers are sounding an increasingly loud warning that such a scenario would cause Defense Department leaders few options for enacting the cuts. And that means a giant target would be drawn on the accounts into which the Pentagon dips to develop and buy new weapons.

BPC has echoed Thompson, saying the armed services would have to buy fewer numbers of weapons at a bigger overall price if the $500 billion cut to planned spending happens. That's because production lines become more efficient over time, so when an armed services cuts the number of a specific weapon it plans to buy, that program's overall cost rises.

Because operations and maintenance accounts are used to fund things like training, Pentagon and White House officials this week urged lawmakers to pass the needed massive deficit-paring legislation that would void the $500 billion cut to planned spending.

Acting White House budget czar Jeffrey Zients and Deputy Defense Secretary Ashton Carter told a House panel that the impact of the cuts cannot be lessened by planning.

The deputy defense secretary warned of cuts to training for troops preparing to deploy to Afghanistan, canceled projects at bases, a hiring freeze, employee furloughs, and in some cases "denials of medical service." He also said the deep cuts would affect a number of weapon programs. All told, the cuts—which Democrats and Republicans say they oppose—would "create a hollow military force."

Some defense spending watchdogs, like Laura Peterson of Taxpayers for Common Sense say the Pentagon budget "certainly can" absorb a $500 billion, decade-long reduction.

John T. Bennett covers national security and foreign policy for U.S. News & World Report. You can contact him at jbennett@usnews.com or follow him on Twitter.

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