A sequestration solution for the Pentagon | The Great Debate – Reuters

By Benjamin Friedman

The sequestration drama in Washington is less severe and intractable than you have heard. A partial solution: Block the across-the-board cut of $42.5 billion in military funds this year — the Pentagon’s portion of $85 billion due March 1 — and spread the savings over several years by tweaking military spending caps already on the books.

Because this option preserves deficit reduction without raising taxes and lets the military drawdown intelligently, a congressional majority might support it.

Pentagon leaders are sounding the alarm — warning about the impending sequester and the additional $500 billion reduction in spending over a decade. Furloughed civilian employees, extended deployments, reduced naval patrols and procurement delays, they say, will leave the military unable to perform its job and deter U.S. enemies.

President Barack Obama and congressional leaders nod gravely — then blame the other party. Democrats suggest replacing sequestration with new taxes and spending cuts, some to the military. Most Republicans talk about replacing sequestration only with spending cuts and prefer reducing the federal workforce, entitlement spending or other domestic programs’ budgets.

This politicking obscures much — including common ground. First, the Friday deadline is soft. Legislation can reverse sequestration after it hits. The Pentagon can use other funds to delay the reckoning until later this year. Congressional leaders know this, which is why their negotiations don’t match the urgency of their rhetoric. Talks should pick up before March 27, though, when the temporary measure funding the government is due to expire.

Second, our leaders avoid explaining that there are two kinds of sequester. Only one slashes arbitrarily. The other enforces spending caps, which cut while encouraging prioritization. Pentagon leaders hoping to dodge any cuts conflate the two, seeking to confront Congress with an all-or-nothing conundrum.

The 2011 Budget Control Act said that if Congress failed that year to schedule $1.2 trillion in deficit reduction over a decade (compared to the projected baseline), the Treasury would take (sequester) a year’s worth of those savings at the start of 2013 — half from the Pentagon. The New Year’s tax deal shrank and delayed that cut — hence the $85 billion due Friday.

This sequester is designed to induce a deal via anticipated pain. It cuts more than 8 percent of the Pentagon’s non-war budget. Because it applies equally to every “program, activity and account” (except military personnel), it prevents managerial choice.

The other sequestration enforces the budget act’s 10-year budget caps on the military and other discretionary spending, which save the rest of that $1.2 trillion. The Pentagon can manage funds normally beneath the cap. If budgets exceed the cap, sequestration cuts enforce it.

The impending sequester can be less swift and broad than our leaders assert. Funds authorized in one year are spent over several — so the total cuts take years. Transfer and reprogramming authority can allow managers to move funds. The uncapped war budget remains a safe haven for programs little related to war.

The Pentagon’s predictions are mostly nightmares, meant to frighten. The 2013 sequester would leave military spending at roughly 2006 levels, adjusting for inflation. Over a decade the caps, combined with the war’s end, would leave spending near Cold War highs. The U.S. military will remain far superior to all others.

Still, we should not let the cries about fake wolves blind us to real ones. This year’s sequestration should be avoided. It will likely lead to furloughs, complicate procurement and harm readiness. Drawdowns should not be achieved by a demoralizing slash.

There is a better way: Lower the caps incrementally for several years to make up the $42.5 billion in savings. Make the reductions less avoidable and allow the Pentagon more time and rope to plan them. Simply by keeping caps flat for three years, for example, rather than indexing them to inflation, Congress would save more than $50 billion.

Of course, delayed cuts might never arrive. New presidents and Congresses may undo them if the pressure for austerity fades. That is a downside. But you can account for political uncertainty by making future cuts larger than those they replace.

Sequestration is not a dirty word. It forces choice, which the U.S. political system evades — especially when spending in the name of defense. We can avoid military sequestration’s vice and keep the virtue: the imposition of discipline on an agency that has pursued too many ambitions at excessive expense.

via A sequestration solution for the Pentagon | The Great Debate – Reuters.