Bloomberg News

Panetta Notifies Congress of Worker Furloughs Under Cuts

February 20, 2013

Secretary of Defense Leon Panetta said he notified Congress of plans to impose furloughs on the Pentagon’s civilian employees should automatic budget cuts take effect on March 1 and “continue for a substantial period.”

Panetta said in a message today to about 800,000 Department of Defense employees that the “vast majority” of them would have to take unpaid leave and that they would get at least 30 days’ notice if that’s to happen.

“We are doing everything possible to limit the worst effects on DoD personnel but I regret that our flexibility within the law is extremely limited,” Panetta said. “The president has used his legal authority to exempt military personnel funding from sequestration, but we have no legal authority to exempt civilian personnel funding from reductions.”

Deputy Defense Secretary Ashton Carter said last week in congressional testimony that furloughs are likely to average one day a week for as many as 22 weeks, resulting in a 20 percent cut in pay for civilians. Pentagon Comptroller Robert Hale said today that notifications would start in mid-march and furloughs wouldn’t begin until late April.

“There will be some very limited exceptions to these furloughs,” Hale said at a Pentagon briefing. “We will except citizens deployed. We will not furlough civilians deployed in combat zones. We will not furlough civilians who are required to maintain safety of life or property, but only to the extent that they have to do that to maintain life and property.”

State-by-State Costs

Unless lawmakers and President Barack Obama can agree on an alternative, the across-the-board spending reductions, known as sequestration, will begin March 1. About half the cuts will affect defense spending, requiring about $46 billion in reductions in the seven remaining months of this fiscal year and about $500 billion over a decade.

The Pentagon estimates furloughs of civilian employees would cost them as much as $4.86 billion in pay in the fiscal year that ends Sept. 30.

Virginia would see the biggest drop in payrolls to civilian employees of the military, with $660.9 million lost, according to the estimate released by the Defense Department. That would be followed by California, which would see a $419.7 million decline; Maryland, losing $359.3 million; and Texas, losing $290.9 million.

‘Hollow Force’

“Sequestration will put us on a path toward a hollow force and inflict serious damage on our national security,” Panetta wrote today in a letter to Representative Howard “Buck” McKeon, a Republican from California and chairman of the House Armed Services Committee.

House Speaker John Boehner said that the House has acted twice on “common-sense cuts and reforms” to replace sequestration while Obama “has yet to put forward a specific plan that can pass his Democratic-controlled Senate.”

“As the commander in chief, President Obama is ultimately responsible for our military readiness, so it’s fair to ask: What is he doing to stop this sequester that would ‘hollow out’ our armed forces?” Boehner, an Ohio Republican, said in an e- mailed statement.

White House spokesman Jay Carney said Congressional Republicans are unwilling to accept a “balanced package” of spending cuts and revenue increases. If they maintain their position and the sequester goes into effect, “Americans will lose their jobs because Republicans made a choice for that to happen,” he said.

Less Training

Military leaders said last week that allowing the spending reductions to take effect would mean less training for Army personnel and fewer purchases of Navy vessels and Air Force fighter jets.

Separately, the Army said sequestration, combined with stopgap defense funding already in effect, may trigger furloughs or job cuts for more than 302,000 of its employees and those of contractors and businesses that provide services, according to a planning document obtained by Bloomberg News.

Nationwide, the job effects and reductions in base operations and improvements would cost the economy $15.4 billion, the service said.

The hardest-hit state economically would be Texas, followed in order by Alabama, Pennsylvania and Virginia, according to the Army.

Contractor Workforce

Texas, home to some of the biggest Army bases such as Fort Hood, may lose $2.4 billion from the service’s spending reductions, according to the service. Almost 35,000 jobs would be affected, including about 30,000 civilian workers.

The Army said it has begun cutting its contractor workforce, firing temporary employees and canceling depot maintenance, among other actions, to help offset an expected $18 billion budget shortfall in the fiscal year that began Oct. 1.

An index of the top 10 Pentagon contractors trails the Standard & Poor’s 500 Index by 6 percentage points this year, as Washington deadlocks for the second time on how to avert $1.2 trillion in automatic budget reductions set to begin kicking in March 1.

To contact the reporters on this story: Tony Capaccio in Washington at acapaccio@bloomberg.net; Brendan McGarry in Washington at bmcgarry2@bloomberg.net

To contact the editor responsible for this story: John Walcott at jwalcott9@bloomberg.net


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