Lew Joins Panetta in Warning of ‘Significant Risk’ to Defense

Office of Management and Budget Director Jacob Lew has told U.S. House Republican defense and budget leaders that automatic across-the-board cuts “could pose a significant risk to national security.”

Cuts triggered if a congressional supercommittee can’t agree by late November on $1.5 trillion in deficit reductions would mean “purchases of weapons would have to be cut dramatically,” Lew wrote Sept. 15 to three lawmakers, including House Budget Committee Chairman Paul Ryan.

Lew’s letter was signed by Defense Secretary Leon Panetta. Bloomberg News obtained the letter.

Lew also wrote to House Armed Services Committee Chairman Howard “Buck” McKeon of California and House defense appropriations subcommittee chairman C.W. “Bill” Young of Florida.

Lew said the fiscal 2013 budget would require a cut of 11 percent compared with the current $513 billion budget, or as much as 25 percent when compared with the fiscal 2013 figure unveiled in February. The final reduction would depend “on whether the president elects to exempt military personnel funding.”

The Defense Department “would almost certainly be forced to furlough large numbers of its civilian workers, training would have to be curtailed, the force reduced and purchases of weapons would have to be cut dramatically,” Lew wrote.

“Spending limits beyond fiscal 2013 would also be dramatically lower,” he wrote. Lew didn’t outline potential cuts beyond 2013, however.

‘Significant Risk’

Still, for 2013, “reductions of this magnitude, imposed in this matter, could pose a significant risk to national security,” Lew said.

The Congressional Budget Office estimates that the automatic cuts would reduce the 2013-2021 budget by $55 billion annually or $492 billion total.

President Barack Obama in April directed then-Secretary Robert Gates to find $400 billion in national security cuts over 12 years.

The scope of the review has since been revised to about $420 billion in “security spending” over 10 years, with $330 billion in Pentagon reductions, as part of the Budget Control Act of 2011 that Obama signed Aug. 2.

$450 Billion Reduction

Pentagon officials say the $330 billion, compared to budget baselines drafted last year, equates to a cut of $450 billion over 12 years. Pentagon officials have said they can manage these reductions.

Still, “if the Pentagon’s base non-war budget were to be cut $850 billion or so over 10 years, it would go down to about $472 billion annually, the approximate level of the budget in 2007, more than $70 billion higher than DOD spending was in 2000 just before the wars,” said Winslow Wheeler, former Senate defense appropriations staff member and now director of the Straus Military Reform Project in Washington.

“At $472 billion, our defense budget would remain more than twice the defense spending of China, Russia, Iran, Syria, Somalis, Cuba and any other potential adversary,” Wheeler said.

Lew wrote that the Pentagon’s review of U.S. missions, capabilities and “our role in a changing world” will be completed before December.

To contact the reporter on this story: Tony Capaccio in Washington at acapaccio@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net

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