As the specter of mandatory budget cuts totaling $500 billion within the Defense Department looms ever larger, the Air Force finds itself facing the possibility of dialing back its aircraft modernization plans and ditching older aircraft.
Lawmakers have until the end of the year to figure out how to cut $1.2 trillion from the deficit; otherwise DoD will face about $500 billion in automatic spending cuts known as sequestration.
The cuts, which would take place over the next decade, would be on top of the nearly $500 billion in cuts the military is currently contending with/.../
If the automatic defense spending cuts do kick in, they would not cause programs to be canceled immediately, nor would they force base closures or lead to pay reductions or layoffs of military personnel, according to a report by the Center for Strategic and Budgetary Assessments in Washington.
But as many as 108,000 Defense Department civilians could lose their jobs after sequestration takes effect, the report says. And $3 billion in funding for military health care is at risk because the money does not come from military personnel accounts, which are exempt from the cuts.
If the powers at be decide to exempt the health care funding from sequestration, that $3 billion would have to come from somewhere else, such as military construction, research and development or procurement funding, said Andrew Krepinevich Jr., president of the Center for Strategic and Budgetary Assessments.
Another wrinkle is if sequestration makes it impossible for the Defense Department to pay contracts to industry, it will have to renegotiate the contracts, Krepinevich said.
“This could work very much to the government’s disadvantage,” he said. “For example, if it’s a firm fixed-price contract, it allows the vendor to renegotiate the terms and they could say, ‘Well look, if you really want this, the price is going to have to go up.’ This is not a very efficient way to run a railroad.”