Pentagon, short on cash, puts civilians on unpaid leave

WASHINGTON Wed May 15, 2013 4:16am IST

U.S. Secretary of Defense Chuck Hagel speaks at a town hall meeting at the MARK Center in Alexandria, Virginia May 14, 2013. REUTERS/Yuri Gripas

U.S. Secretary of Defense Chuck Hagel speaks at a town hall meeting at the MARK Center in Alexandria, Virginia May 14, 2013.

Credit: Reuters/Yuri Gripas

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WASHINGTON (Reuters) - The Pentagon told its civilian workforce on Tuesday that it will put most of them on unpaid leave for one day a week starting in July, a deeply unpopular move that Defense Secretary Chuck Hagel blamed on sweeping budget cuts imposed by Congress.

The U.S. defense budget has taken the single biggest hit from automatic spending cuts, known in Washington as the "sequester," and Hagel said he had tried to spare civilians the financial hardship ahead by first cutting elsewhere.

"We did everything we could not to get to this day, this way," Hagel told an audience of Defense Department employees.

"But that's it. That's where we are ... And I'm sorry about that."

For those of the more than 600,000 civilian defense employees affected, the decision translates to a salary cut of roughly 20 percent during the furlough period - which runs from July 8 until the end of the fiscal year on September 30.

Although the total will vary, most civilian employees will be on unpaid leave for 11 days, shorter than the earlier Pentagon estimates of 14 days issued in March and 22 days in February.

But many civilians had hoped Hagel would find other ways to cut the budget or allow individual branches of the military to shield the civilian employees entirely. The move is expected to save $1.8 billion.

Although civilians will be able to challenge their furloughs, personal issues like financial hardship will not be taken into account, one U.S. defense official said.

Only vital missions are being protected. A second U.S. defense official, briefing reporters, said more than 120,000 civilian employees would be exempted from furloughs, including employees stationed in combat zones and medical personnel.

Employees in Navy shipyards are also being exempted because of fear their absence would delay maintenance of nuclear ships, according to an attachment to a memo by Hagel to Pentagon leaders released to reporters.

"No one service, no one's going to be protected more than anybody else," Hagel said.

MORE FURLOUGHS NEXT YEAR?

The mandatory budget cuts - which were included in a 2011 law aimed at reducing the federal government's wide deficits - took effect on March 1 and total $109 billion through September 30, including a $46 billion reduction in defense spending.

The cuts will deepen in the coming years unless Congress acts to reverse them.

Indeed, Hagel offered faint hope to Pentagon employees that the situation will improve in the 2014 fiscal year, when the sequester will impose an additional $52 billion in cuts to projected Defense Department spending.

"I can't guarantee you that we're not going to be in some kind of a similar situation next year," Hagel said, asked by one employee for any assurance more furloughs were not on their way.

There was limited reaction from Congress, with concerned lawmakers - including those representing military-heavy districts - calling for a need to free the Defense Department from the automatic cuts.

But it was unclear whether the furloughs would create any additional momentum in Congress, where gridlock has thwarted compromise on budget by Democrats and Republicans.

U.S. military leaders have warned the cuts will erode the military's readiness to respond in the future to global tensions - sobering words as the Pentagon weighs threats from North Korea, advances in Iran's nuclear program and the fallout from Syria's civil war.

Hagel noted steps the Pentagon has already taken to slash costs, including the Air Force cutting flying time and the Navy and Marine Corps scaling back training and deployments. The Navy decided, for example, to reduce the presence of U.S. aircraft carriers in the Gulf from two carriers to one.

"Even after taking all these actions, we are still short of needed operating funds," Hagel said in his memo.

The next steps for the Pentagon are unclear. Last month, Hagel said in a major policy speech that he had ordered a review that could lead to additional belt-tightening measures such as reducing the number of generals, paring back the civilian workforce and moving to stem spiraling costs of new weapons.

The Pentagon is also urging Congress to move forward with a new round of military base closures. Closing domestic military bases is deeply unpopular with lawmakers due to the damage such cutbacks can cause to local economies.

(Reporting by Phil Stewart; Editing by Will Dunham and Mohammad Zargham)

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