OMB Starting to Prepare for the Sequester

Over the past few days, the Office of Management and Budget is getting to work preparing for the sequester hitting on January 2 of next year. OMB so far has notified Congress that it intends to exempt military personnel accounts from the defense sequester, an authority that is granted by the Balanced Budget and Emergency Deficit Control Act of 1985. In addition, OMB acting director Jeff Zients sent a memo to agency heads telling them to be ready for sequestration.

Furthermore, the House Armed Services Committee held a hearing, at which Zients and Deputy Defense Secretary Ashton Carter testified, examining the effects of the sequester on defense spending. Both men noted that the BBEDCA requires that a sequester be applied evenly to all non-exempt programs, projects, and activities (PPAs). Carter estimated that there were more than 2,500 PPAs in the Defense Department and that they would be subject to an across-the-board 10 percent cut assuming that military personnel accounts are exempted as planned. Zients, however, said that it would be difficult to know exactly how much the cuts would be until final FY 2013 appropriations levels are known and the amount of unobligated balances (money left over from previous years) for defense and mandatory spending for non-defense are known.

Carter went further into how the sequester could affect defense operations specifically. Of course, with accounts cut across the board, DoD personnel would be reduced as would spending on base support services and maintenance of military family housing. In addition, the sequester would hit the Defense Health Program, causing problems with provider payments which could potentially lead to access problems. Acquisitions could be affected to the point where funds would be insufficient to make planned purchases, leading to delays. Clearly, the sequester would be disruptive for the Pentagon, as it would be for all the other affected departments and agencies.

Zients stressed during his testimony and repeatedly during questions for Committee members that "the impact of sequestration cannot be lessened with advance planning and executive action." We agree. While knowing how the sequester will impact different programs and agencies is important, more important is to negotiate a plan to make sure we don't have to find out what will happen. That plan, offsetting and then some the cost of repealing the sequester, should be made ASAP.