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Despite Sequestration, Hawaii Could Lose Hundreds More Jobs

Honolulu Civil Beat article on March 1, 2013

Despite Sequestration, Hawaii Could Lose Hundreds More Jobs

By Kery Murakami

The 655 figure is how much the Navy plans to let go across the country, and is part of an up to $110 million budget hit the Navy could take in Hawaii. Under such a scenario, the Navy said it would also cancel planned maintenance of aircraft depots, also in the second half of the fiscal year, which would begin next March. That in turn caused defense contractor BAE Systems to send out notices to 250 ship maintenance employees at Pearl Harbor that they may be laid off should the Navy contracts be canceled. The company sent out a total of 3,600 notices to employees around the country.

And there could be more job losses. U.S. Army spokesman Jim Guzior said the Army has already canceled depot maintenance in anticipation of a combination of the sequester cuts and the possible second round of cuts. Guzior said an unspecified number of temporary employees may be let go. The commander of U.S. Army Pacific is holding off until Apr. 1 to see how the budget negotiations go, he said.

The additional cuts would be the result of the president and Congress’ inability to agree on a budget deal last year. Facing a government shutdown without a new budget, both sides agreed to keep the previous budget going under what’s known as a Continuing Resolution. That budget expires on March 27.

Should the president and Congress again not be able to reach a budget deal and extend the current Continuing Resolution, the problem would be two-fold, said Rep. Colleen Hanabusa in an interview.

Federal agencies would be living through all of 2013 under the same budget as 2012, even though maintenance costs have increased. Additionally, departments are prohibited from moving money between funds to meet shortfalls in often critical areas, said Hanabusa, a member of the House Armed Services Committee, who on Monday introduced a bill trying to avert the second round of cuts.

Testifying before the House Armed Service Committee on Feb. 13, Deputy Secretary of Defense Ashton B. Carter said the 2012 budget has too much money in investment accounts — which includes procurement, research and development — “and insufficient funding in the Operation and Maintenance,” which pays for the fundamental costs of running the military.

“The problem is the money is in the wrong accounts,” Carter said.

Because of the shortfall, Carter, as well as top officials of the Army, Navy, Air Force, Marines and National Guard, said they would have to make deep cuts in operations and maintenance should the Continuing Resolution be extended on March 27.

Hanabusa said those cuts would affect Hawaii because of its role in maintaining and repairing ships and bases.

“O&M is us in Hawaii,” Hanabusa said.

“This is the result of the Navy’s intent to cancel certain ship maintenance availabilities tied to the Continuing Resolution, not sequestration,” said BAE spokesman Neil Franz of the latest round of potential layoffs.

Job Losses Due to Political Gridlock

The new round of cuts are separate from the sequestation cuts that go into effect Friday, but both stem from deep political divisions in Washington DC.

The White House has said that in Hawaii, sequestration will lead to the furlough of 19,000 Pearl Harbor civilian employees, although theoretically a budget deal could stop the job losses before they begin in April. Base operation funding for the Army would be cut by about $106 million in Hawaii. Air Force operations would be cut by about $15 million. For the Navy, maintenance and repair of USS Chafee could be canceled.

Those cuts stem from the 2011 budget debate, in which Republicans demanded spending cuts in return for agreeing to raise the nation’s debt ceiling. The negotiations resulted in an agreement to make $1 trillion in cuts over 10 years and another $1 trillion in across the board sequestration cuts over 10 years. Those cuts were never intended to go into effect as is, but were meant as an incentive for the president and Congress to reach an agreement. But with Obama and Democrats insisting on revenue increases from the wealthy to offset some of those cuts, and Republicans refusing to raise taxes, sequestration goes into effect this week.

On Thursday, Congress rejected rival Democratic and Republican proposals to stop the sequester. The Hillreported that Obama will meet with congressional leaders from both parties and chambers on Friday at the White House to discuss the next steps for addressing the sequester. But The Hill also reported there’s no Plan B for what comes next with the sequester. And, lawmakers and aides say they do not expect Congress to end sequestration before April. Negotiations to freeze the automatic spending cuts could drag into May or beyond.

Different from that is what happens March 27, when last year’s Continuing Resolution runs out, leading again to the prospect of a government shut down. Congress and the president could either reach a budget deal or in the absence of that, pass another continuing resolution.

Joel Friedman, Vice President for Federal Fiscal Policy at the Center on Budget and Policy Priorities, a left-leaning think tank in Washington D.C., said the extension of the Continuing Resolution is possible.

“If the stalemate continues and the only thing they can agree on is to keep the government running, then it’s certainly a possibility...There’s no indications of them coming together," he said. "I don’t get the feeling of them being in the middle of a negotiation.”

The two — sequestration and the expiration of last year’s Continuing Resolution — coming into effect within weeks of each other led Army Chief of Staff Gen. Raymond Odierno to tell the House Armed Services Committee, “We now find ourselves in the midst of a perfect storm.”

On Monday, Hanabusa introduced a measure intended to be a fail-safe in case the Continuing Resolution were to be extended for the remainder of the year. Hanabusa’s bill would within limits allow the Department of Defense to shift money around to avoid the cuts.

“From a business standpoint, budget flexibility makes perfect sense. From an economic standpoint, it helps avoid devastating impacts on our still-growing economy. From a defense standpoint, it allows the military to deploy its reduced budget in a strategic manner to maintain our level of readiness,” she said.

The prospects for the bill are tenuous. Neither Hawaii senator supports it.

Other proposals, including one from Senate Republicans to avoid sequestration, also would have allowed more flexibility, giving Obama authority to shift cuts slated for defense to other areas of the budget.

That idea hasn’t gotten traction from Democrats because it would not increase the level of spending to offset cuts. At the same time, insulating only defense from cuts would weaken the incentive for Republicans to back revenue increases to offset sequestration cuts in non-defense spending.

Sen. Mazie Hirono opposes Hanabusa's bill, said a spokesman, who pointed to her remarks on the Republican bill. Hirono said she supports "a balanced approach that would have significantly reduced the size and scope of these cuts by closing loopholes that benefit the very wealthy and big corporations ... Forcing the President to choose where the axe will fall instead of addressing the job killing cuts themselves is not the solution families in Hawaii want."

Asked about Hanabusa’s bill, Sen. Brian Schatz said in a statement, as he did of the Republican proposal, “It’s not a realistic solution and is a dangerous approach to addressing the deficit. We can avert this disaster through smart reductions in domestic and defense spending, and by closing tax loopholes.”

Hanabusa, though, said her bill is different from the Republican proposal because it would not affect the negotiations around sequester, but is meant to only take effect if the Continuing Resolution were to be extended.

She said it focused only on defense spending because that is her expertise. She would not be opposed to other bills that would allow similar shifts in spending in other department.

“Hopefully, we won’t need my bill,” she said, saying her preference is for Congress and the president to work out a budget deal.

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