War Funds Face Automatic Cuts in January, Pentagon Says

Funds for war operations, including in Afghanistan, face automatic cuts in January if Congress and the White House don’t agree on ways to reduce the deficit, according to a Pentagon spokeswoman.

The Pentagon reversed earlier statements that the war spending, known as overseas contingency operations (OCO) funding, wouldn’t be subject to automatic cuts. The cuts called sequestration were mandated under the Budget Control Act of 2011, which created a special congressional committee and required automatic reductions when it failed in November to agree on ways to cut the deficit.

“Upon further review of the law and after consultation with the Office of Management and Budget, the department now agrees that OCO funding is not exempt from sequester,” Lieutenant Colonel Elizabeth Robbins, a Pentagon spokeswoman, said today in an e-mailed statement to Bloomberg Government.

The prospect of cuts in funds for U.S. forces at war may add urgency to efforts to pass legislation averting the automatic reductions that would cut total Pentagon spending by $55 billion in fiscal 2013. The administration has requested $88.5 billion in war funding for the fiscal year, which begins Oct. 1.

Defense Secretary Leon Panetta wrote to Senator John McCain, an Arizona Republican, in November, saying that war-time funding isn’t directly affected by the sequester.

“The November statement was an error,” Robbins said. “At that time, the department believed that since overseas contingency operations (OCO) funding could not trigger a sequester, it would also not be subject to sequester.”

The application of the new sequester procedures to war funding wasn’t “straightforward,” she said, because the Budget Control Act amended old sequester procedures that predated the existence of overseas contingency accounts.

To contact the reporter on this story: Roxana Tiron in Washington at rtiron@bloomberg.net

To contact the editor responsible for this story: John Walcott at jwalcott9@bloomberg.net

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