If Congress does not act to avoid sequestration (an automatic across-the-board cut) set to go into effect in January 2013, the defense budget plan would be reduced by another $500 billion, doubling the reduction already proposed by the president, Secretary of Defense Leon Panetta told Congress.

Testifying last week before the Senate Appropriations Defense Subcommittee (SAC-D), Panetta (along with General Martin Dempsey, Chairman of the Joint Chiefs of Staff), warned Congress that sequestration would “inflict severe damage on our national defense.”  Panetta said DoD is convinced that additional reductions caused by inaction on the impending sequestration and its “meat-axe approach” to cutting defense “could hollow out the force.”

Dempsey underscored the negative effects sequestration would have on the defense program and the new defense strategy.  He told Senators that while he couldn’t predict “precisely how bad the damage would be from these automatic cuts,” he is certain that they would limit U.S. military options available to meet security challenges.  Sequestration “would lead to further end strength reductions, the potential cancelation of major weapons systems, and the disruption of global operations,” he said.

Dempsey also told the subcommittee sequestration would also reduce the $88.5 billion requested for Overseas Contingency Operations (OCO) by as much as $8 billion.  As a result, DoD would have to further reduce the base budget to reprogram funds to OCO for war costs that must be paid.   Originally, OCO costs were thought to be exempt from sequestration.  However, the Office of Management and Budget (OMB) has since told DoD that OCO costs would not be exempt.

Commenting on the FY2013 DoD budget, Panetta called the president’s request a “balanced package that keeps America safe.”  He noted that so far congressional committees reviewing the budget request have expressed support for a number of investment program changes that are in line with the administration’s new security strategy.  However, he noted that some congressional committees have rejected proposals that he called “critical to the long-term viability of a defense strategy that lives within the constrained resources of the Budget Control Act.” 

He cited actions being considered by the Congress that would reverse proposals to eliminate “aging and lower-priority ships and aircraft,” oppose military end-strength reductions to the Army and Marine Corps, and reject efforts to control health care costs.  He warned that such actions would undermine the department’s efforts to achieve savings to sustain a balanced program.  He urged the subcommittee to work with him to achieve a consensus that preserves “the strongest military in the world. 

Panetta also asked the subcommittee for support in the coming months as DoD works to address FY2012 unbudgeted costs for:  1) higher fuel prices ($3 billion, unless prices recede); 2) additional manpower (higher Reserve mobilizations) and operating requirements (Navy and Air Force) in the Middle East;  and 3) increased transportation requirements due to the loss of Ground Lines of Communications in Pakistan ($100 million per month).  He said DoD will submit an omnibus reprogramming soon to realign funds to cover these costs.