Panetta Warns of Debt-Limit Agreement’s ‘Doomsday Mechanism’

In a bid to head off “a further round of very dangerous cuts” to military spending, Defense Secretary Leon Panetta made a strong case for avoiding the automatic spending cuts that would kick in if Congress fails to enact a second round of budget reductions called for under the agreement to raise the nation’s debt ceiling.

“It is an outcome that would be completely unacceptable to me as secretary of defense, to the president and, I believe, to our nation’s leaders. Most importantly, it would be unacceptable to the American people,” Panetta said Thursday during his first Pentagon press conference.

Under “this kind of doomsday mechanism,” as Panetta called it, if lawmakers fail to approve at least $1.2 trillion in automatic spending cuts, an equivalent amount would be shaved off the budgets of all federal agencies over 10 years, split equally between defense and non-defense programs. That outcome could result in annual defense budget cuts approaching an additional $50 billion to $60 billion, leading to furloughs, layoffs and program disruptions, a senior defense official told reporters on Wednesday.

Panetta argued that the discretionary side of the budget, which includes the Pentagon, should not bear the lion’s share of the debt-reduction burden since it only makes up one-third of federal spending. As a result of this week’s deal over the debt limit, the department already is responsible for coming with an estimated $350 billion in spending cuts over the next decade.

“We’re already taking our share of the discretionary cuts as part of this debt-ceiling agreement, and those are going to be tough enough. But I think anything beyond that would damage our national defense,” he said.

At the same time he reassured the public that the first round of cuts are achievable, he pointedly said officials would not be drawing up contingency plans in case the automatic cuts are triggered.

“We’re focused on the number that was part of the debt ceiling agreement, which, as I said, was very much within the ballpark number that we had worked out with the president and OMB. … I’m not even beginning to consider what would happen with regards to sequestration. All I know is that from the review we’ve been doing for what we have to deal with in these numbers, that anything that doubles that would be disastrous to the defense budget,” Panetta stated.

Dan Cohen
Dan Cohen

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