Additional Defense Cuts Could impact war funding

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(CNN) — Afghanistan war funding could be in jeopardy if proposed severe budget cuts hit the military in the beginning of 2013, according to senior Pentagon officials.

Senior leaders at the Pentagon are becoming increasingly concerned as it becomes clear that the $500 million in additional budget cuts possibly hitting the Pentagon in January, known as sequestration, also includes the Overseas Contingency Operations (OCO) which is the Pentagon’s war budget.

The potential cuts are the result of a congressional deal struck last fall while negotiating over the current budget deal. Those negotiations resulted in the inability of Congress and the president to agree on a deficit-reduction plan. If there is no agreement, come the beginning of January 2013, the Pentagon will be forced to cut an additional $500 billion from its accounts over the next 10 years.

The OCO budget controls what is spent on military combat operations, including those in Afghanistan which are due to conclude at the end of 2014.

“It certainly wouldn’t help the war effort to have OCO funds curtailed, according to a senior Pentagon official familiar with Afghanistan planning who is not authorized to speak on the record about sequestration plans.

Chairman of the Joint Chiefs of Staff, Gen. Martin Dempsey, who has said the sequester budget cuts would be devastating to the military, is said to also be very concerned about the cuts in OCO and what effect it can have on war planning, according to a source close to the Chairman.

Pentagon officials will not discuss details because they maintain there is no planning going on to prepare for sequestration.

But at a Senate hearing on Wednesday, Dempsey said even though the war funding would be affected by the potential eight to 10 percent cuts under sequestration, he would have to make up for those cuts and Pentagon planners would be forced to trade the OCO cuts for deeper cuts inside the overall Pentagon budget.

“That money will have to come from some reprogram activity to move money from base to cover those war- related costs,” Dempsey said.

Dempsey said the cuts would be about $8 billion of the $88.5 billion requested to, “sustain operations globally, mostly in the Gulf region,” according to Dempsey. “But we have to fund that,” he said.

Last week, however, three senior members of the House of Representatives wrote a letter to President Obama slamming the administration for including OCO into the massive possible budget cuts.

“To impose arbitrary and automatic cuts to our war fighters, who are putting their lives on the line for our country, would be morally unconscionable and would break faith with them and their families,” according to the letter signed by the chairman of the House Armed Services Committee, Howard P. “Buck” McKeon, R-California, and the chairmen of the House Foreign Relations and Intelligence committees.

Loren B. Thompson, chief operating officer at the Lexington Institute, a Washington, DC policy research group, has been examining and writing about the effects of sequestration on the Department of Defense since last fall.

“If you do sequester in the Department of Defense it is very uncomfortable, if you do it in a war zone it could be fatal,” Thompson said.

“Somebody at the Pentagon will have to work this out,” he said.

Even though the threat of sequester has been around since the fall of last year, Congress and Pentagon officials are voicing their concern now because it only really became clear last week that the OCO budget was included under sequestration.

But officials on the Capitol Hill and at the Pentagon acknowledge the confusing law buried many conditions in its language – including the OCO provision — which has taken months to discover.

One senior Hill staffer told Security Clearance the only reason the House Armed Services committee knew OCO was in sequester was hearing about it in the press.

It appears the discovery of OCO falling under sequestration was a fluke and was announced to Washington policy and lawmakers, for the first time, late last month in a letter from the Office of Management and Budget answering questions from House Budget Chairman Paul Ryan, R-Wisconsin, regarding specific items included under sequestration.

The letter, obtained by CNN, explains in legal terms why OCO is included under sequestration.

“Funds designated by Congress by OCO are subject to sequester, provided those funds are not otherwise exempt,” according to the OMB letter.

The law even tripped up the Pentagon. Last November, Secretary of Defense Leon Panetta said OCO was not under the sequestration law. But after review with lawyers and the Office of Management and Budget, the DoD was able to clarify its understanding of the law.

“Upon further review of the law and after consultation with the Office of Management and Budget, the Department now agrees that OCO funding is subject to sequester should that occur,” said Beth Robbins, a Pentagon spokesperson.

“The application of the new sequester procedures to OCO funding was not straightforward,” Robbins said.

The letter to the President by McKeon and the other two committee chairmen also acknowledged that the members were caught off guard about the OCO being included in sequestration because they were basing their information off of Panetta’s November statement.

“As you might expect, this decision came as a surprise to members of our respective committees,” the letter signed by McKeon and the chairmen of the House Foreign Relations and Intelligence committees said.

“It is very complex and it took people in Washington a very long time to figure it out,” Thompson said referring to the sequester law.

By Mike Mount

CNN National Security Producer

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