SEQUESTRATION KICKS IN!

Sequestration formally arrived late Friday night and is probably here to stay. Whether or not it remains in its current form remains to be seen.

Despite weeks of dire warnings and a classic case of Washington finger-pointing, it appears that Congress and the White House have already moved on to the next fiscal crisis which is the continuing resolution that expires March 27.

The House is scheduled to vote Thursday on a straightforward continuing resolution that would set federal spending through the rest of the current fiscal year without addressing the sequester cuts and other potentially contentious questions.

The measure will pair a continuing resolution for most of government with newly written Defense and Military Construction-VA spending bills. While providing no additional funds to the Pentagon or the VA, the new spending bills would allow them to better manage the effects of the sequester.

The President had already indicated his willingness to work together to avoid a government shutdown.

Regardless, as Federal Reserve Chairman Ben Bernanke pointed out in hearings last week, granting greater flexibility for the sequestration cuts might bring better policy results, but would not significantly affect the impact of the sudden reduction in federal spending.

Here is what we do know so far:

* For the remaining seven months of the fiscal year, the defense budget will shrink by $42.7 billion while non-defense programs will take a $28.7 billion hit

* Most of the reductions will come from discretionary spending

* If federal employees are furloughed, it will not begin until April at the earliest

* Military personnel pay and allowances will not be impacted by the sequester, nor will military personnel face furloughs

* Termination of base support contracts as well as military community and base activities would not be felt until early April

* Civilian furloughs could affect military hospitals and clinics because civilians make up 40 percent of the workforce. Patients who currently receive care at military treatment facilities may be forced to seek case in the private sector at an increased cost to the Defense Department and the taxpayer

* Commissaries may have to close one day a week

* Child care services, base schools, teen programs and family services may also be impacted as funding tightens

As we have said on many occasions, this is no way to do business. We agree with the Army’s Chief of Staff Gen. Ray Odierno who said that what the Army needs most is some budget predictability through several years so that end-strength, modernization and readiness can be carefully balanced so we can avoid a weakened force.