Voice

Wages of fear 2: hyperbole or prudence?

For more than a year, certain members of the U.S. Congress -- Rep. Buck McKeon, and Sens. Lindsey Graham, John McCain, and Kelly Ayotte -- aided and abetted by the Aerospace Industries Association, have been beating the drum of fear about the impact of a sequester on our nation's defense. They have all been wrong for more than a year and, for the most part, they have been talking in an echo chamber. Only other "defenders of defense" are listening.

The rest of the country seems to understand that with defense spending at an historic high and the wars in Afghanistan and Iraq ending, it is inevitable that the defense budget will come down and will do so with little impact on the global dominance of the American military.

This has not stopped the "defenders." Senator Graham went over the top again on Fox News Sunday.   According to The Hill, he claimed that Defense Secretary Leon Panetta told him on Saturday night that a sequester "will be shooting the Defense Department in the head and we'll have to send out 800,000 layoff notices the beginning of the year."

Panetta probably did not say this. But Graham chose to take appropriate prudence at the Pentagon and spin it into hyperbole as part of the last-minute effort to keep the defense budget away from the fiscal and spending cliff.

Graham is dead wrong. Military personnel are exempt from a sequester, so no uniforms will be affected by these budget cuts. Graham has already been wrong for a year in asserting that 1 million industry jobs will be lost -- contractors are working on contracts that have already been funded, which by law are untouched by the sequester.

I have been saying for some time that the rules of the sequester make it likely that some civilian Pentagon employees could be furloughed for a short time to save resources in DoD's Operations and Maintenance accounts. What Panetta probably said was that if the sequester happens, he will notify all the civilian personnel at the Pentagon that some of them could be subject to furlough, as the department figures out how to work with 10 percent fewer resources than originally requested.

That is a prudent move. If spending cuts happen on Wednesday and are not fixed by the Congress over the next couple of months, there are likely to be furloughs. Estimates differ, but furloughs could affect as many as 100,000 civilian employees, or one eighth of the Pentagon's civilian staff. Not a pretty way to manage, but, with the Pentagon employing more than a third of all the civil servants in the government, inevitable and, above all, manageable.

Graham's last-minute thump on the drum of fear is just another example of the hyperbole with which he and his group have tried to keep defense out of the effort to rein in spending and raise revenues. Maybe he imagines that fear is more effective than fact at this late stage in the negotiations.

Win McNamee/Getty Images

The Sheathed Sword

Cliff-diving: We now return to our previously scheduled programs

There are only a few more days, and cliff diving is all the rage.

Senate Majority Leader Harry Reid has said that making a deal before Jan. 2 seems unlikely, while House Speaker John Boehner has scarcely been seen or heard from since last Friday, when he pulled the House vote on tax increases for the very, very rich. House lawmakers have been summoned back to Washington for an exciting Sunday night session -- during the Redskins-Cowboys game, no less -- but it seems like the political system has reached the limits of gridlock.

One wonders why? America's political leaders have sad faces, but don't seem motivated. Are the Democrats waiting for their 55-seat majority to kick in? Is the speaker waiting to be re-elected to his speakership, before he turns on his troops and passes something with Democratic votes?

Something tells me the political leadership is not as worried about going over the cliff as they have been saying they were for the last year, especially for the last six weeks.

Indeed, it has been my sense all along that the fiscal cliff rhetoric is theater. I have thought for 16 months that the curtain would come down, the rhetoric would abate, some sausage-like deal would be passed, and we would enter 2013 walking out of the playhouse.

But it seems the political leadership want to keep going. And for my favorite part of the budget --defense spending -- it turns out that extending the show may not matter all that much. Soldiers, sailors, and flyers will still be paid. Retirees will still get benefits. Contractors will keep working, with no layoffs or contract cancellations. Even civilian employees in the Pentagon, whom I see as the most likely to be affected by sequester, have been reassured by Secretary Panetta that there will be no immediate furloughs.

So when the circus leaves town, it seems, very little happens and we return to the program previously in progress. Or, to put it another way, the same political stalemate that has existed since Barack Obama first became president.

Let's hope the markets applaud on Jan. 2.