i'm here to discuss sequestration. these are the automatic spending reductions for fiscal year 2013 required by the budget control act. i want to start by reiterating a point made when the president signed the budget control act last august. sequestration by design is that policy. congress should pass balanced deficit reduction to avoid it. the intent of the sequestered was to use the threat of mutually disagreeable cuts to defense and non-defense program to force congress to enact a compromise deficit reduction plan. if allowed to occur, sequestration would be destructive to domestic investment, national security, and core government operations. a c bo report estimated that on an annual basis, the defense spending would be cut by approximately 10% while non-to spend -- defense spending would be cut by almost 8%. the actual% cut would be greater given that 1/4 of the fiscal year would already have a lack by january 2. these cuts would be across the board and indiscriminate. there has been a lot of focus on defense cuts

suit -- sequestration. it would apply evenly across programs, projects, and activities. because congress has not made progress toward enacting a balanced reduction, but the administration is taking a number of actions to prepare for a possible sequestration. earlier this week, omb issued guidance to agencies and will engage them on matters necessaries for issuing the sequestration order. i have also notified congress of the president's intent to exercise his authority to exempt all military personnel accounts from sequestration if it were to occur. regarding federal contractors, the department of labor issued guidance on the warren act clarifying they are not required to issue advanced warnings to their workers and that doing so would actually be inappropriate in light of the purposes of the act. we are taking the necessary steps. but as i stated, no omar declining will mitigate the damaging effects of sequestration. sequestration is a blunt, indiscriminate instrument designed to force action, forced congre

sequestration. unless congress enacts a deal by january 2nd another $500 billion will be cut over the next decade on top of nearly $500 billion already cut. officials summoned congress and industry leaders say that would devastate national security. instead of the deal however lawmakers proposed a continuing resolution to keep the military funded for the first six months of the fiscal year that started october 1. what's the outlook for sequestration and what will it lean for the pentagon and industry? to discuss that and more is the round table with rick mays the congressional editor for the times newspapers, todd harrison with the center, mackenzie england an, and david. lady, gentlemen. welcome. rick let me start with you and we're going to get to sequestration, but what about the continuing resolution? there's not a sense it's a continuing resolution at all. what have they done? >> pretty much nothing. they'll wait and pass something temporary in a temporary fashion good through april 1st so they

sequestration. i have done a little more detailed announced -- analysis of what it would mean in terms of budget authority and out reach. and talk about what it would mean. i will start with an overview of defense spending. this chart shows total national defense spending and inflation in just a dollars in fiscal year $13. the blue part is the base budget, the red part is the funding for iraq and afghanistan that has been on top of that. and so you can see in inflation- adjusted dollars, defense spending and the projection. that year, the prediction was -- your taking total defense spending/total economic output. gdp has grown steadily. an average of about 3.2%. it has risen and fallen in cycles several times since then. defense spending as a% of gdp would be 4%. if you take out war funding, it would be 3.4%. if you project through fiscal year 17 like the budget does, defense spending would be about 3% of gdp. this is the lowest it will have been since 2001. the defense is nowhere near 2001. defense

making hard choices is the antithesis of sequestration. sequestration is arithmetic. it is multiplication. it is irrational. and it is a breach of trust your men and women in service. it is a way to avoid hard choices. i am fairly sure that my views would differ from others. but it is an abdication of leadership and responsibility and ultimately democracy if we fail to make those choices. if we resort to sequestration and apply an across-the-board cut, that is a failure of leadership, a failure of government and which ought to be ashamed of ourselves. -- and we ought to be ashamed of ourselves. we can baker vigorously and have majority rule at the end of the day. but making hard choices is what the business of government on a good day is all about. applying arithmetic is irresponsible. >> we will get this gentleman right here. you too will be the last two. >> with in the dod strategy, you talked about responsibility -- the reverse ability clause which impacts us tremendously how is that even functionable even in light of sequestration? how can you implement that? >> i

is subject to sequestration. only slight silver lining on that cloud is that the operations and maintenance part of o.c.o. and the base part of o.c.o. become one account in the year of execution so without all the gobbledygook, it means we can take money from ordinary training readiness here at home in order to keep the troops in the field is funded in a way that we really o'them. but that makes the hit on the readiness back here at home even harder. so you're shifting the pain away from the -- which is the responsible thing to do. but you make it even heavier. the second thing i would say is it's not entirely possible for those parts not in o.c. or maintenance and we are going to have to find other ways there to provide the material and so forth that the troops need in the field. otherwise i could go on and on. but let me just take a few. think military medical care was cited already. obviously that's an area where we will work very hard within the limits of this rigid law to do everything we can to make sure th

funding, including sequestration. let me take a moment to explore some history now, if i may, to give perhaps a more practical understanding of that shift in policy. if my memory serves me correctly, and i believe it does, in 1992 during hurricane andrew, when it was necessary for the military to provide support to civil authorities because of the magnitude of the destruction that occurred and the aftermath, the majority of the force that responded to provide assistance to civilian authorities came out of our active component. a great deal of that came out of the 82nd airborne. a smaller portion of that force came out of the national guard. if i remember the ratios correctly, and i believe i do, roughly 70% or slightly less of the force that responded to hurricane andrew in 1992 came out of the active component with slightly more than 30% coming out of the reserve component. but the benchmark was roughly with an emphasis on the active component participation in the defense support of civil authorities discommission. t

. >> let's talk about the looming threat of sequestration. you have written about different prlems that this presentsts, but is there any solution? >> i i think there is a view that this will be sorted out in november. we will remain at this standoff pimping pepeople are saying that key is to lead the economy -- at this sndoff. people are saying that the key is to lead the economy off the cliff. i imagine a lot of business owneners would prefer that t to happen. >> we saw some good news and some bad news from the the jobs numbers. there was more job creation than expected for the month of july. but unemoyment did go up and then what did you hear? >> it is a great day to be a messenger because everybody gets to pick something that they like if you are on the republican side, you are trying to sell this uptick in umployment. ifou are o on the president's side 16300 jobs. you will see a a lot of back-and- forth with this. >>ichael, the washington business journal has beeeen following the threat of sequestration. one thing i have to point out we

making hard choices is the antithesis of sequestration. sequestration is arithmetic. it is multiplication. it is irrational. and it is a breach of trust your men and women in service. it is a way to avoid hard choices. i am fairly sure that my views would differ from others. but it is an abdication of leadership and responsibility and ultimately democracy if we fail to make those choices. if we resort to sequestration and apply an across-the-board cut, that is a failure of leadership, a failure of government and which ought to be ashamed of ourselves. -- and we ought to be ashamed of ourselves. we can baker vigorously and have majority rule at the end of the day. but making hard choices is what the business of government on a good day is all about. applying arithmetic is irresponsible. >> we will get this gentleman right here. you too will be the last two. >> with in the dod strategy, you talked about responsibility -- the reverse ability clause which impacts us tremendously how is that even functionable even in light of sequestration? how can you implement that? >> i

sequestration is having an impact today.oday, companies are holding back on employment, companies are holding back on investment, because of the uncertainty that's been introduced by this irrational approach. how do we solve it? the way we've always reached compromises. first, we have to agree that we're going to put everything on the table, and we have to be honest about what the budgetary issues are. we have to look at them not only today. we have to be honest about the projections that we're seeing. there have been a variety of ways that have been put forward. i don't want to suggest i have the greatest insight, but we're not going to get there if everyone takes a hardened position that it can only be done one way. there has to be a compromise there. >> meeting almost on a weekly basis. in those meetings, you know, what are you telling, what's the secretary telling you? >> those meetings have been a great opportunity to share perspectives on this. it's really important, of course for the department of defense and the defe

if we resort to sequestration if we resort to sequestration an

sequestration is different. it would create a much larger mess. >> a larger mass on top of what is already -- >> you keep talking about the 10.3%. for fy13, the cuts would be closer to 14%. >> at the 10.3% is the reduction in budget authority for the year. by the time sequestration takes effect, you are a quarter of the way through the fiscal year. he'll have to apply that reduction in the remaining nine months of the year. the dollar amount, though, is 10.3% less than what it otherwise would have banned. back -- it would have been. >> [inaudible] >> right. in some accounts, that is very important. you are spending money very quickly. if he of all this messiness, it happens, and you have to renegotiate all of these contracts. that would likely cause you to reconsider some of these programs in the future. sequestration, it will not directly terminate programs. making the unit cost go up, reducing the purchasing power across all the different acquisition programs, is going to is goingdod reconsider some of these p

we would like to go back and discuss the sequestration section. >> ok, we will go to sequestration. we are going to fp5a. raise your hand if you do not have fp5a. mr. barton, texas. >> david barton, texas. it is an attempt to take a few words that are not necessarily well articulated. it would suggest that after sequestration, we insert -- which are severe automatic across-the-board cuts in defense spending over the next decades -- and then back to the text. mr. chairman? >> raise your hand. >> i appreciate delegates defining sequestration. it was an admission by the subcommittee. i am willing to accept the amendment. >> that sounded a lot like a second. [laughter] >> you can see what it will look like with the language. >> [inaudible] >> in the english teachers here? -- any english teachers here? >> that is sufficient now that they have posted it? ok, we are good. discussion? >> thank you, senator. i want to make a comment. i know it makes us feel good and warm and fuzzy when we talk about cutting spending and that sort of thing. except with the military sometimes. my point i want

for more detailed treatment of the mechanics of sequestration. i briefly highlight the impact of sequestration specific to dod. much to be echoed by non-defense government managers. turn-critical goods and service for the federal government. i can describe many impacts on dod but it is not possible to devise a plan to implement it, somehow eliminates these consequences or mitigate them substantially. the intent of sequester was to use the threat of mutually agreeable cuts to defense and nondefense programs implemented inflexibly and mindlessly forced congress to enact a compromise deficit reduction plan. never designed to be implemented. sequestration if it were allowed to happen would introduce sins was chaos into the management of every single one of 2,500 defense investment programs. waste in the defense spending at the very time we need to be especially careful with the taxpayers' dollar, inefficiency in the defense industry that supports us, and would cause lasting disruptions even if only extended for one year. sequestration in fiscal year

find a way to avoid sequestration. let the next congress and the new president fix this, give them a little breathing room. >> i need a two-word answer from you, and that is what vice presidential pick would best help mitt romney? >> you know, i think pawlenty and portman are in the hunt. one last thing. you didn't ask me about harry reid. i've been around this town for a while. i actually like harry. but what he did on the floor of the senate is so out of bounds. i think he's lying about his statement of knowing something about romney. this is what's wrong with -- >> that's pretty stiff. you think the leader of the senate is lying? >> i really do. i think he has created an issue here. i think he's making things up. and at a time when the country is just about to fall apart. cyber security. there's a bipartisan desire to do this. there's plenty of blame to go around. but, candy, we're running out of time as a nation. let's start talking about the real issues that matter to real people and i just can't let that pass. i

the idea of sequestration, it's an enforcement mechanism.y said to themselves, we're going to force ourselves to cut a budget deal with each other. and if we don't do it, we'll hit ourselves in the face way hammer. and that will be soed ba, we'll do it. the problem is both, you don't do it and then you end up hitting yourself in the face way hammer. so that's the basic situation they're? the problem is with people who actually have to make policy. like you're sitting in the pentagon, you have to plan the next ten years. it may not hit you next month but you're trying to figure out what you are going to cut what are you not going to cut. you don't know with any remote idea how much money will have for the next ten years. so maw i have the dumbest possible cuts coming down the line, and therefore you just cannot plan. and so everyone in the policy world is in a panic over this sledgehammer. and i wouldn't expect them to solve this before the election. i wouldn't totally expect them to do it in the lame duck sessionment i figure it would all ge

we've had a number of chances to avoid these painful sequestration cuts. this was always the stick if they didn't take the carrot. the deal for the super committee, bowles/simpson. in this big poker game in washington, they had their bluffs call and now they don't want to third take their medicine. it's amazing. both sides have had their bluffs called. the president is clearly playing politic because he doesn't want the pink slips go out. the republicans say this is dire and horrific but can't come up with anything measurable that would indicate it is. >> this is serious. these kinds of scutes where they hatchet instead of scalpel can cause real problems. the rhetoric of massive cuts has always been a loser's bet. here's some good news. there's still time to avoid this. if folks in congress are upset not because they want to put the fear of god in them but they're interested in the implications of the economy, guess what, make a deal. there's still time. make a balanced deal and we can avoid this pain. they say you know what? to avoid sequester, i'll accep

now the issue, whether it becomes an election issue is that sequestration takes effect january 2.days for the federally rerequired layoff notice, the friday before the election. >> greta: what it is, there is a law that says if you are a big, huge company and you want to lay off people, have you to give them a 60-day notice. >> that's correct. it's the warren act, for all large companies, making significant layoffs, a sizable amount, like closing a plant. with the sequestration, we are facing $5 billion in defense cuts over 10 years fthey go into effect. so the contractors are worried, lockheed martin has said they were going to issue the notices to all 123,000 of their employees. >> greta: so the obama administration wasn't happy because they don't want that to go out to the employees. >> that's what the republicans are saying. >> greta: is there any doubt that the warren act applies to the defense contracts? >> there is. there is something people and the labor department says that because it is still unknown whether or not sequestration is going to go into effect -- democrats an

sequestration if you watch what republicans have done in our budget we took up and dealt with sequestration. a year ago we cut $497 billion from the military. those are planned cuts. if you cut the military, it is programs you want to look at when you make cuts. you can't go into the military and say i am going to cut half a billion dollars. when you take your house payments you can send 10%. see what happens when you do? you can't cut programs that 10% across the board. most everybody says this is a problem. we have been trying to find ways to solve this. has been going around and we put it in the budget and there's a coalition of democrats and republicans on the senate side trying to build something. harry reid said he won't bring it before hand. almost an education to america what sequestration means. we found other places to make the cuts. a better plan scenario what our military looks like. that issue i believe will continue to grow, go into the framework of the election in november and i would hope we do something sooner instead of putting everything in lame-duck. i don't look forward

. >> greta: big fight over sequestration. what do you think? i think it's mindless. the idea of sequestering that amount of many hundreds of billions of dollars is fundamentally wrong. it's poor government. and if it does fall the way it looks like it could, and it hits the department of defense, it would be a monumental mistake. >> greta: you may monumental mistake,ed about government. it was agreed to by both parties a year ago. were they relinquishing their obligation to the people, being lazy? how do you describe it? everyone knew this day would come. >> sure t. hasn't come, though. it's close. but it isn't there yet. what they did was kick the can down the road, not very well or very far. they haven't performed their cpms in the congress of the united states, to pass responsible budgets that are thoughtful and intended. this is a stop-gap excuse for a fail tower do their job. >> greta: you know, how does it differ -- you used to be in congress. has congress changed? or is this congress and the president like to kick things down the road a little bit? >> well, th

if sequestration goes into effect. >> neil: let me stop you.e automatic cutting into effect, go ahead. >> right. those automatic cuts are $1.2 trillion for the defense department, it's about half a trillion dollars. what that means over ten years, for all program purposes you wipe one year's budget for those ten years. if you are in a business that is to some extent dependent on the ffs budget you have to look over those ten years, in one of those years you will have no revenues and profits from the defense sector. >> neil: i know what you are saying. 10% cut doesn't mean one year, it could average out to be the equivalent. many argue the defense establishment has a lot of money and everybody has to take their licks and defense industry is part of it, as well. republicans agreed to that when they came up with sequestration, what do you say? >> that is an interesting point. sequestration by design was supposeded to be so horrible that no rational person would choose it. unfortunately it's become the law of the land. to your point about the defen

>> well, sequestration's got really two elements, thria policy element and a jobs element.us are very concerned with the fact that even the defense secretary, mr. panetta, has said, this is going to be incredibly damaging to the pentagon and the ability to effect its mission. on the jobs fund and i come from virginia, as you know, there is a terrific impact, a negative impact in terms of jobs in our communities. virginia has historically played a huge role in the defense of this country. we are going to see tremendous job losses because you will see the pentagon have to pull back in a way that will affect our mission to defend this country. so what the house has done, we have said, we don't want the president's defense cuts to hit, so we have offered up alternatives, ways to cut the budget that will do -- make a responsible move to avoid this hit of the pentagon that the president's proposing. >> greta: let me tell what you i think might be the collective frustration. this problem began in august. the idea was, a super committee was created to make a decision by november. i

you asked about sequestration. if there is a crisis, some of my friends on the other side of the aisle -- why would you recess? we went out a day earlier than planned. we went out on thursday and not friday. i think there are a lot of political games being played to exploit unaddressed issues for partisan games at the expense of the country. at some point, all of us need to put the country's interest first. so, no, unfortunately i do not think we are going to have a very productive eight days. it looks like we will be able to fund the government for six months. but that is pretty much it. i do not know if we are going to have a foreign bill. we are not going to pass any the of -- any of the appropriations bills. we are going to kick sequestration and the debt increase and tax deductions down the road. host: the next caller is from massachusetts. caller: good morning and thank you very much for your time this morning. i have to tell you how angry i am with all of you. you are saying it yourself. why are we waiting f

also, let's talk about sequestration.n a president is more concerned about re-election and this balloting and things of that nature than worried about the fact that he is about to fut put 200,000 men and women in uniform out of business -- >> greta: you know what, congressman -- i am -- i am so with you on that. i don't understand why anyone was not here in washington, worrying about that. i am totally behind with you that oneful i think it's outrageous that everybody's on vacation and campaigning. be here and take care of that now. >> i spoke in a rally today to talk about the almost 1 million jobs that will be lost, not just with the military, but also with the industrial base that supportses him and the possible one tick of a percentage point on our unemployment. i am ready to go back to washington, d.c. and the house voted legislation to stave off sequestration. >> greta: i believe you. i am with you on that one. i am not with you in anything to inhibit other people in iowa -- in ohio from voting, if there is no reaso

i am talking, of course, about sequestration under which it is estimated that the n.i.h. will face not a $100 million increase but a $2.4 billion cut. i know a lot of my colleagues have discussed the effect that the sequester will have on defense spending, but it's important to remember that 50 cents out of every dollar of cuts that will occur under sequestration will come out of nondefense spending, including specifically the n.i.h. devastating is the word that keeps being used when people are asked how sequestration would affect our national institutes of health. that's how n.i.h. director dr. francis collins described the effect of a nearly 8% cut to the agency's budget. those who are familiar with science know how important it is in ongoing experiments that there be a consistent data set through the period of the research. when you interrupt research for financial reasons, you can damage the value of research conducted in other years. i agree with my colleagues that we must reduce our long-term deficit, but when we cut funding that creates jobs and leads to life-savin

on augus august 7 the president signed the sequestration transparency act and within 30 days must tell it will be implemented which is the day he gives the acceptance speech. i don't know which is going to dwarf the other in terms of news. is he talking to anybody in congress as to how he will attempt to implement it or will it be his idea his way and is that the way it is supposed to be? >> he said in the last couple of days it can wait until after the november elections and he he would be willing to address the issue. but, of course, republicans have to agree to tax rate increases. and, of course, that is not the way you sit down and negotiate. that is not the way you should address an issue of this transkennedient national security importance. i don't think the president understands the importance of national defense. he hasn't shown it to my satisfaction. >> greta: i don't think he has. not the way i read the law. the law that he signd that passed the senate unanimously and the house passed 414-2. he signed it august 7. it says it requires the obama administration to send congress

or sequestration actually does happen? i know it is a crystal ball question, but i would like to see what you guys think will happen. >> is going to happen or should happen? i'll answer that. i launched into my boys got description of the legislative process in the were the democracy and i talked about some of the men and women have known in the congress of the united states who are truly courageous, or willing to make hard choices -- who are willing to make hard choices and you know that this is more important than the continuing progress of their political careers. and when the people spoke to stop laughing, i press that point. there are good men and women on both sides of the aisle. i am a democrat. i take a fairly conservative approach to security policy .oul the exhibit of branch of government can strongly influence and inform policy choices that will be made and the power of the purse is in the congress. the budgetary decisions that have to be made and it is the duty of the executive branch to provide the kind of lea