Shutdown Cost Military $600M, Layoffs Looming

The government shutdown cost the Defense Department at least $600 million in lost productivity and left DoD at funding levels that could force layoffs next year for the furloughed civilian personnel who just returned to work, Pentagon Comptroller Bob Hale said Thursday.

"We haven't decided [on layoffs]," Hale said. "We're going to have to get smaller – that will mean fewer civilians. We're going to get smaller – I can't tell you how much."

Hale and Defense Secretary Chuck Hagel said at Thursday's Pentagon briefing their major concern was the impact on the morale of the uniformed military and the civilian workforce from the repeated political cliffhangers on fiscal matters and the Congressional gridlock over budgets.

"I'm a lot more worried about the morale effects," Hale said. Many civilian personnel now have the attitude that "I'm not so sure I want to work for this government," he said.

Hagel said the uncertainty was brought home to him in one of his recent private meetings with enlisted troops.

One of the troops told Hagel that his wife wanted to know if their family had a future in the military.

"Do we have a future? What is the future for me as an E-5," Hagel was asked.

Hagel said he did not have a good answer for the soldier, partly because the last-minute agreement in Congress that ended the shutdown and lifted the debt ceiling "did not remove the shadow of uncertainty that has been cast over our department."

Hagel referred to the continuing resolution passed by Congress that left the Defense Department at current funding levels through mid-January while also facing another $52 billion in cuts under the Budget Control Act's sequestration process.

Veterans groups echoed the warnings issued by Hale and Hagel.

"At the Pentagon, the short-term budget enables DoD to tread water, but the mandatory sequester continues to impact readiness across all the services. Planes are grounded, ships are in port, and our ground troops aren't training," said William A. Thien, national commander of the Veterans of Foreign Wars.

At the White House, President Obama sounded a similar theme on the impact on readiness and U.S. credibility worldwide from the shutdown and the threat of default.

"Probably nothing has done more damage to America's credibility in the world, our standing with other countries, than the spectacle that we've seen these past several weeks," Obama said. "It's encouraged our enemies.  It's emboldened our competitors.  And it's depressed our friends who look to us for steady leadership."

At the Pentagon, Hale said he had yet to make a full accounting of the costs of the shutdown.

"We know at a minimum it was $600 million in lost productivity," he said.

The cost will go higher when increased interest rates and the costs of canceled training classes and transportation are figured in, Hale said.

Hale said he could not give an initial estimate on possible cutbacks and delays next year in major acquisitions programs or on whether planned drawdowns in the size of the Army and the Marine Corps might be speeded up.

Without giving specifics, Hagel said that the sequester cuts would force a "pull back on longer term investments."

Hale said that tuition assistance for the troops would continue but possibly at lower funding levels.

"There may be some trims. We'll continue to support the program," he said.

In an earlier message to all DoD personnel, Hagel said the government shutdown was "an unwelcome and unnecessary distraction from our critical work of keeping the country safe."

Hagel told returning workers that they will be paid in full for the time that they were furloughed during the shutdown.