After months of delay, Pentagon told to plan for 'fiscal cliff'

Panetta

The Pentagon said on Wednesday the White House budget office has directed it to begin planning how to implement billions of dollars in across-the-board spending reductions if Congress and the president fail to agree to avert the cuts before Jan. 2.

The decision reversed the Pentagon's yearlong position that it was not planning for the automatic cuts, known as sequestration. The cuts were included in last year's Budget Control Act because officials thought the process was so onerous it would force rival political parties to compromise. But no spending deal was reached.

With the automatic cuts now looming Jan. 2, Pentagon spokesman George Little said the department had been directed by the White House Office of Management and Budget to begin "internal planning" for the reductions.

"Naturally we hope very much that sequestration will be avoided," Little said. "We don't want to go off the fiscal cliff, but in consultation with OMB we think that it is prudent at this stage to begin at least some limited internal planning."

The OMB instruction comes as the White House and lawmakers are engaged in a last-ditch effort to find an alternative package of revenue increases and spending cuts that would enable them to avoid the $1.2 trillion in automatic across-the-board cuts required under sequestration, part of the so-called fiscal cliff.

Nearly half of the automatic spending cuts would fall on the Pentagon. The $500 billion would be in addition to the $487 billion in cuts to defense spending mandated in the Budget Control Act. The department began implementing those reductions in its 2012 budget.

Civilian employees of the Department of Defense are likely to be among the earliest to feel the cuts, according to an analysis by Todd Harrison of the Center for Strategic and Budgetary Assessments, a national security think tank.

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