Panetta: Congress Must Look at Whole Federal Budget for Cuts

WASHINGTON, Aug. 16, 2011 – Budget concerns and the need for the Defense Department to work with the State Department dominated a discussion at the National Defense University here today with the Cabinet members who lead those departments.

Secretary of State Hillary Rodham Clinton and Defense Secretary Leon E. Panetta talked with students at the National War College and the Industrial College of the Armed Forces at Fort McNair. Frank Sesno, a former CNN correspondent who now works at the George Washington University, moderated the discussion.

Both State and Defense face budget cuts as a result of the debt-ceiling deal worked out Aug. 2. Panetta said the cuts will affect national security, and that he and Clinton want the American people to „recognize how important it is that we maintain our national security and that we be strong.“

But the defense secretary acknowledged that the fiscal outlook presents a challenge.

„We recognize that we’re in a resource limitation here, and that we got to deal we’ve those challenges,“ Panetta said. „But I don’t think you have to choose between our national security and fiscal responsibility. And I want the country to know that we can get this done, but we have to do it in a way that protects our national defense and protects our national security.“

The Defense Department can handle the $350 billion in savings over the next 10 years that is mandated in the agreement, the secretary said. But if members of Congress cannot agree on further reductions, another $500 billion in funds would be sequestered from the department.

„If they do the sequester, this kind of massive cut across the board which would literally double the number of cuts that we’re confronting,“ he said. „That would have devastating effects on our national defense. It would have devastating effects on, certainly, the State Department.“

Congress must look beyond the „discretionary spending“ in the federal budget — most of which is in Pentagon funding — to address the nation’s deficit, Panetta said.

„If you’re serious about dealing with budget deficits, you can’t just keep going back to the discretionary part of the budget,“ he said.

An across-the-board cut of that magnitude would hollow out the force and weaken America’s ability to respond to threats, Panetta said.

„More importantly,“ he added, „it would break faith with the troops and with their families. And a volunteer [force] is absolutely essential to our national defense. Any kind of cut like that would literally undercut our ability to put together the kind of strong national defense we have today.“

Sesno asked Panetta about a report calling for changes to the military retirement system. A task group for the Defense Budget Board studied the issue and will submit a report later this month, Panetta said. He stressed that no decisions have been made with regard to retirement.

„It’s the kind of thing you have to consider, in terms of retirement reforms in the broad form,“ he said. „But you have to do it … in a way that doesn’t break faith … with our troops and with their families. If you’re going to do something like this, you’ve got to think very seriously about ‚grandfathering,‘ in order to protect the benefits that are there.“

Panetta vowed to protect the benefit. „But at the same time, you know, you’ve got to look at everything on the table,“ he added.

U.S. Department of Defense
Office of the Assistant Secretary of Defense (Public Affairs)