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Defense Can Handle Sequestration, Specialists Say

The Defense Department is to some extent crying wolf with its dire warnings about sequestration’s effect on military readiness because the dollars being cut will become part of an inevitable longer-term budgetary drawdown, a trio of defense specialists said on Friday.

“Sequestration will create a mess and inefficiencies and is bad policy, but it will not make us a second-rate power,” said Todd Harrison, senior fellow for Defense budget studies at the Center for Strategic and Budgetary Assessments, speaking on a conference call organized by a progressive group called National Security Network.

“DoD has to be careful about its rhetoric,” he said. “Our allies and adversaries are listening and may get the wrong impression.” Harrison cited comments about becoming “second-rate” by recently departed Defense Secretary Leon Panetta and a statement by Deputy Defense Secretary Ashton B. Carter that “the wolf is at the door/.../”

Harrison stressed that sequestration for Defense will come in two parts, $40 billion now and another $7 billion beginning the same day the continuing resolution expires. Compared with previous reductions, such as the drawdown of the late 1980s which cut defense by a third, he said, the current slice totaling about 12 percent is “much less. I wouldn’t characterize it as a catastrophe,” he said. “It’s not the magnitude, it’s the abruptness that compounds” the problem, he said, expressing worries that the $32 billion a year TRICARE health insurance program will lose $3 billion.

Without some relief from Congress, he added, the Pentagon “may be forced to default on some contracts, and will inevitably pay penalties to industry, which wastes money, though you don’t hear DoD talk about it.”

Contracting overall, however, “is not as bad as it seems because they’re not cutting outlays,” Harrison said. “Industry will see revenues decline, but gradually,” with service contractors being hit more quickly than equipment vendors, he said. “Some parts of industry may actually see their profits increase after renegotiating on more favorable terms because DoD is not in a good negotiating position.”

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