CSBA in the News

Veterans’ health care funding may be exempt from automatic, across-the-board budget cuts that are due to begin in January, but military health care is not — and a new think-tank report says Congress would have to reprogram $3 billion from other Defense Department budget accounts to fully pay for military health care should the cuts occur.

Large defense companies and industry associations have claimed that the threatened sequestration cuts to the federal budget would cause an immediate hit to the bottom lines of contractors, their workforces and consequently the broader economy if the cuts kick in as planned on Jan. 2. A new study finds that’s not necessarily so, but that on the other hand, cuts to federal civilian employee payrolls would happen almost overnight.

The Defense Department would be forced to cut 108,000 civilian employees from its work force next year if automatic budget cuts take effect Jan. 1, according to a new report.

Automatic budget cuts due to take effect in January will drive up the cost of weapons systems and cut revenues for arms makers in the longer term, but the full brunt of the cuts will not be felt for several years, a top budget analyst said Friday.

Absent a new budget deal between the White House and Congress, defense spending would be hit with an immediate 10.3 percent reduction that threatens the jobs of 108,000 civilian employees, according to an analyst’s new calculations of the looming sequestration threat. Not all those cuts, however, would kick in on Jan. 2, 2013 — considered D-Day — because outlays of already obligated funds would continue.

Sequestration would force the Defense Department and other federal agencies to lay off workers long before the defense industry had to, said a report released today by the Center for Strategic and Budgetary Assessments.