Expert: Possible DoD Firings ‘Tip of the Iceberg’

The U.S. Defense Department’s possible plans to fire some 6,300 civilian employees next year if automatic budget cuts continue may just be “the tip of the iceberg,” according to a former budget official.

The Pentagon’s base, or non-war, budget is set to be sliced by $52 billion to about $475 billion in fiscal 2014, beginning Oct. 1, under automatic cuts known as sequestration unless Congress and the White House agree on an alternative deficit-reduction plan. Any deal appears unlikely, though, as Republicans and Democrats remain at an impasse over taxes and spending.

The job cuts would take place instead of mandatory unpaid leaves of absence known as furloughs, according to a planning document first reported by Tony Capaccio, a reporter at Bloomberg News. The number of layoffs may rise as officials review other sources of overhead costs, according to Gordon Adams, a professor at American University and a former White House budget official during the Clinton administration.

“This is the tip of the iceberg in that process,” he said in a telephone interview.

The 6,300 figure represents less than 1 percent of the Pentagon’s civilian workforce of about 750,000 employees.

“It’s an awfully small number,” Adams said. “It needs to be substantially larger; maybe by a factor of five … The big problem the Pentagon has is the back office.”

The Defense Department is estimated to spend some 42 percent of its base budget on overhead – the uniformed and non-uniformed support personnel who work in such areas as logistics, acquisition and administration. By comparison, the figure for most private-sector companies is about 20 percent.

Reducing the Pentagon’s headcount in support positions makes sense, given the drawdown of U.S. troops from Iraq and Afghanistan and the pressures on the federal budget, Adams said.

“That’s where they’ll get the money to save hardware programs and combat forces,” he said.

The Defense Department faces $500 billion in automatic cuts over the next decade. That’s in addition to almost $500 billion in defense reductions already included in 2011 deficit-reduction legislation. The first installment of automatic cuts began March 1 and sliced about $37 billion from the fiscal 2013 defense budget.

In response, the Pentagon ordered 85 percent of its civilian workforce, or about 640,000 employees, to take six days of furloughs before Sept. 30.

Layoffs are cheaper than furloughs over time because the employer avoids having to pay health care and other benefits, Adams said.

“The bill for furloughs long-term is more expensive long-term than the bill for RIFs,” he said, referring to reductions in force, the Pentagon’s term for the job cuts.

While continued sequestration will ground aircraft, halt training exercises and hurt the military’s ability to prepare for missions, leaders need to be careful about equating readiness with funding for operations and maintenance, an account in which most expenses actually come from overhead, Adams said.

“That’s where they have to bear down,” he said. “Making the false comparison between O&M and readiness avoids dealing with this back office issue.”