Death By A Thousand Cuts: The Continuing Resolution And Sequestration

If you are a program manager in one of the military services, a budgeter in the Pentagon or a senior executive in the defense industry it must seem as if you are suffering death by a thousand cuts. First the Congress and the President agree to the Budget Control Act (BCA) which was advertised as being so awful that it would force Democrats and Republicans to compromise on their most deeply-held principles in order to avoid the consequences, i.e. sequestration. Second, the BCA mandates nearly a half a trillion dollars in cuts to the defense budget. Then the Congressional Committee charged with finding the $1.2 trillion in deficit reduction needed to avoid sequestration failed miserably, opening the door to another $500 billion in reductions to the defense budget. Declaring that sequestration must not be allowed to happen, the Secretary of Defense and the Chairman of the Joint Chiefs of Staff have “forbidden” anybody in the department from planning for such an eventuality. Of course, all that does is send the planning underground. Everyone will plan and prepare in secret with little or no coordination and only limited analyses. Now, Congressional leaders have announced agreement on a six-month continuing resolution (CR) that will fund the entire federal government through next March but at the last fiscal year’s level. And finally, the Department of Labor comes up with one of the most torturous rulings as to why defense companies do not have to send out notices to their employees under the Worker Adjustment and Retraining Notification (WARN) Act.

Even if sequestration can be avoided, and that is by no means assured, a six-month CR will itself play havoc with any number of defense programs. Not only is most spending held to last year’s levels, but the ability of program managers to initiate new programs is severely curtailed. When a budget is finally passed then everyone runs around like crazy trying to spend money or resurrect programs in the final half of the fiscal year.

A CR causes the flow of resources to programs to dry up like a lake bed in the Midwest this summer. Combine that with the uncertainty surrounding the possibility of sequestration and it is surprising that anyone in the Pentagon wants to spend a dime on anything.

If all this were not bad enough for the private companies, the Labor Department comes up with a ridiculous ruling telling CEOs that they can ignore their obligation under the WARN Act to notify their workers that layoffs may be coming. Let’s ignore the possibility that this is politically motivated since notices would have to be put in the mail just four days before the Presidential elections. It is still a bad ruling. The Labor Department says that the WARN Act does not apply because: a) efforts are underway to avoid sequestration, and; b) it is impossible to predict how sequestration will impact DoD programs and, hence, plants and workers.

Congress can always change its mind. In fact, there was hope at one time that it would insert a provision in the CR delaying or even cancelling sequestration. If the possibility of a law not taking effect were a credible excuse then no change in the funding of any program that could be impacted by Congressional decisionmaking would be subject to the WARN Act.

The second argument by the Labor Department is equally silly. The BCA defined in very specific detail how sequestration would be applied. Now that the administration has decided to exempt military personnel from the cuts the rest is simple math. Every line item takes an equal hit. Thus, it is relatively easy to predict how the programs will be impacted and which plants and workers are likely to be laid off.

It is bad enough that this is what passes for governance in Washington. But do we have to have our intelligence insulted as well?