WASHINGTON: Companies that do business with the federal government will have to announce “hundreds of thousands” of lay-offs just days before the November election, predicted the former Pentagon comptroller for George W. Bush.
As sequestration approaches, said Dov Zakheim, the former comptroller, companies large and small will be faced with layoffs, which by law — specifically the 1988 WARN Act — they must announce 60 days in advance. Sequestration would take effect on January 2nd. “60 days before January 2nd is November 2nd,” said Zakheim. Election Day is November 6. “I wonder how many of our politicians went to face the fact that literally hundreds of thousands of people” — all eligible voters, Zakheim noted — “may have gotten notices [four] days before Election Day.”
Zakheim was just one of the former top officials from both the Bush and Obama administrations who gathered at the Bipartisan Policy Center this morning to launch a white paper detailing the disastrous impact of sequestration on both domestic and defense priorities.
“It breaks everything,” retired Gen. James Jones told Breaking Defense after the roundtable event. Having served as Obama’s first National Security Advisor, NATO’s Supreme Allied Commander, and Commandant of the Marine Corps, Jones had plenty of ideas on how to make the military more efficient, from reforming procurement to slowing growth in benefits for veterans and military personnel. But rational reform is incompatible with sequestration’s indiscriminate across-the-board cuts. Acquisition programs like the F-35 Joint Strike Fighter are painfully slow and costly, Jones said, but sequestration is exactly the wrong way to fix them. “If that happens,” Jones told Breaking Defense, “current programs like Joint Strike Fighter go into a tail spin” — with consequences not only budgetary but strategic: “It’ll create vacuums for us around the world and vacuums will be filled by others,” like China.
Sequestration is like “burning the house down,” agreed Zakheim, speaking to the assembled reporters. “The major problem with the sequester — aside from being totally indiscriminate — is that it avoids the central issues,” from fixing procurement to controlling personnel costs.”Defense needs to be reformed, [but we're] not talking about cutting an aircraft carrier or a tank or something,” Zakheim went on. “When you focus on retirement, on health [benefits], acquisition, all the things Gen. Jones has been talking about, that’s more fundamental, and Congress needs to get its arms around that.”
Right now, Congress is moving far too slowly, the assembled experts agreed, saying that the lame-duck session after the election will be too late. “Congress needs to get off their duff,” said retired Marine Corps general Arnold Punaro. “You can’t wait for the lame duck.” Companies that do business with the federal government are already deeply anxious over the uncertainty, he said, and those that are publicly traded will have to downgrade their forecasts in July’s quarterly earnings calls, driving down stock prices.
In the longer run, sequestration may so dampen an already shaky economy that it costs the federal government more money than it saves, by reducing tax revenues and increasing expenses on unemployment benefits. In the Pentagon specifically, the assembled experts argued, cancelling or modifying so many contracts — changes which would often cause the federal government to incur penalties or face years of litigation — would only make an inefficient Defense Department even worse.
“We can save money in the Defense Department… a lot of money,” said former Senator Pete Domenici, who will co-chair the Bipartisan Policy Center’s task force on sequestration with Gen. Jones and former Agriculture Secretary Dan Glickman. “[But] sequester is not the way to do anything.”
“We are arguing for more bang for the buck. The sequester gets you less bang for the buck,” summed up Punaro. “I call the sequester Russian roulette with a round in every chamber.”