The Department of Defense furlough plan will cut work hours and pay of most civilian employees by 20 percent for up to 11 weeks to save $1.8 billion. And Hagel doesn't rule out needing another furlough plan in 2014.
This furlough will help Defense absorb $37 billion in arbitrary budget cuts from sequestration, the mechanism the White House and Congress agreed to in 2011 to try to scare Republicans and Democrats into compromising on a hefty debt-reduction deal. The strategy misfired.
Members of Congress, it turns out, prefer capricious spending cuts to putting their names on a more considered compromise that might put their reelection at risk. Republicans have chosen sequestration over closing tax loopholes, and Democrats prefer it to curbing entitlements, despite warnings from military leaders that automatic defense cuts are devastating readiness.
The silver lining in this leave-no-fingerprints approach to debt reduction is that the annual budget deficit is shrinking. The Congressional Budget Office reports this month that the federal spending this year will exceed tax revenues by only $642 billion, the smallest shortfall since 2008.
If sequestration stays in effect, defense spending will be cut another $52 billion in fiscal 2014 and by $500 billion over the next decade. And in 2014 and beyond military personnel accounts won't be protected from sharing the burden of sequestration like they are in this first year.
Hagel told a group of Defense employees in Alexandria, Va., Tuesday, that he settled on ordering a 11-day furloughs because "I could not responsibly go any deeper into cutting or jeopardizing our core missions on readiness and training."
Roughly 120,000 workers will be exempted including 50,000 foreign nationals who work on U.S. bases overseas under host-nation agreements. The other 70,000 exempted employees either hold critical readiness jobs; are needed to ensure safety of life and property; are essential for delivery of military health care including to wounded warriors, or are deployed or temporarily assigned to war zones. Among those in critical readiness jobs are almost 30,000 shipyard workers building or overhauling nuclear submarines and aircraft carriers, platforms critical to force readiness.
Defense childcare center employees will be exempted to protect families. Non-appropriated fund employees who run base exchanges and morale, welfare and recreational activities also won't be furloughed because doing so for these employees wouldn't save appropriated defense dollars.
Teachers and faculty in Defense-run dependent schools overseas and in rural areas stateside will face furlough for only five days after classes begin in the fall. Fewer furlough days protects against a lapse in accreditation.
Hagel noted that 11 days is half the length of furlough projected in March, before Congress finally passed a 2013 defense appropriations bill and before budget officials scrambled to find ways to soften sequestration's effect on civilian workers. The number will not exceed 11 this year, senior defense officials explained in a background briefing at the Pentagon to discuss how the decision was reached and how it will be implemented. And the number could from fall from 11 by September if spend rates are lower than expected.
"The overall goal is to minimize adverse effects on missions…because we are devastating the readiness of this military right now," one senior official explained. A secondary goal is that furloughs be fair, consistent and shared across military departments.
Hagel rejected Navy's plan not to furlough anyone. Instead, dollars saved through Navy Department furloughs can be redistributed to the Army, which has had to suspend unit rotations through its combat training centers, or the Air Force, which has suspended flying in 12 combat aircraft squadrons.
Defense officials rejected a charge by some Republicans that the furlough announcement is a political move to pressure Congress to negotiate a debt deal. Cuts to civilian payrolls were needed only after other operations and maintenance accounts had been squeezed, they said.
"We've already made the cuts we believe we can," said a senior Defense official. Facilities maintenance "we've essentially stopped…except for safety of life and property. We've cut back on base operating costs. We have hiring freezes (and have) made about as many training cuts as we can and still meet needs in Afghanistan and deployments."
Commands will send out furlough letters May 28 to June 5. Employees will have seven days to appeal. Some might argue their jobs are more critical than commands appreciate but more exemptions will be hard to get. Financial hardship will not be a consideration, officials said. They assume furloughs will hit many workers and families hard.
"This is one of the most distasteful tasks I've had in more than 30 years of government service," said one official who helped shape the plan.
The biggest negative expected will be to employee morale, officials predicted. No one will be happy losing 11 days' pay but federal employees also haven't seen an annual pay increase for three years.
Political appointees are not subject to furlough but Hagel has promised to forfeit his pay the same number of days as department employees.
Defense Comptroller Robert Hale told an auditorium of Pentagon employees in April that furloughs not only would impact morale but "seriously damage productivity in virtually every area of the department."
Among employees being furloughed are skilled maintainers of ships, tanks and aircraft, medical personnel, educators of military children and managers of contracts worth billions of dollars, officials said. Reducing their work hours 20 percent for 11 weeks might free up more training dollars for soon-to-deploy units but long-term readiness isn't helped by the move.
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