Defense

September 21, 2012

Carter: Sequestration would have effect of ‘hidden tax’

Because it would lead to inefficiencies, the sequestration mechanism built into the Budget Control Act would amount to a hidden tax, Deputy Defense Secretary Ashton B. Carter said Sept. 20.

“If sequestration happens, it is not only disruptive in many ways I’d love to describe, but it’s a hidden tax all by itself,” Carter said during an interview at the Newseum with Politico Pro Defense’s Phil Ewing. “It forces us to be uneconomical, and our industry partners to be uneconomical, in the conduct of our affairs. That’s not good.”

Sequestration refers to a mechanism in last year’s law that raised the debt ceiling that would trigger an additional $500 billion across-the-board defense spending cut over the next decade, in addition to $487 billion in cuts already programmed, unless Congress identifies equivalent savings by January.

Along with Defense Secretary Leon E. Panetta, Carter said, he is urging Congress to find a solution.

“We fervently hope that something can be done to avert sequestration,” Carter said. “I don’t know how many months Secretary Panetta and I have been railing about what sequestration will do to national defense,” he said. “I think people didn’t know what the word meant, but he did, and we did, and the word he used is ‘devastating.’”

The deputy defense secretary said he cannot say anything good about sequestration, and he called its size and the manner in which it was applied “senseless.”

“And makes the jobs of people like us who are trying to manage your security to a reasonable result … impossible,” he added.

As Defense Department managers work to “get our programs just so,” including all the things they must do for service members and their families, Carter said, the impending cuts are prohibitive. “In comes something like this that makes orderly disposition of the public’s business impossible,” he added. “So I very much hope some way can be found over the next few months to stop it.”

Carter said he’d be open to Congress enacting a delay in the January deadline to allow more time for a solution. “A delay’s better than having it,” he said, “and if a delay leads to ultimately dispelling this cloud, that’s all the better.”

The potential for government shutdowns and the prospect of the government operating on a series of continuing resolutions in place of a budget also affect defense industry partners trying to do their jobs, Carter said.

“You’re working on contingencies at the same time you’re trying to do the bedrock business that we’re supposed to do, which is to support the warfighter and deliver value for the taxpayer,” he said. “So it’s annoying, it’s frustrating and it’s counterproductive.”

Carter said people may be aware of the “extremely disruptive, uneconomical and wasteful” effects on defense programs such as aircraft and vehicle acquisition, but they may not appreciate potential effects on operating accounts.

Under sequestration, he explained, warfighting costs could require tapping into Army operations and maintenance funding, which in turn would affect training, which then would affect readiness.

“The force will not be as ready to do things elsewhere in the world. … It really has an effect on security,” he said.

Sequestration also affects people, Carter said – not only service members, civilian employees and their families, but also industry partners.

“They are the ones who build the things that make our military the greatest in the world,” Carter said. “It affects them, [and] it affects their employees. So across the board, it deserves the word ‘devastating.’”

 




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