National Press Club

Levin Predicts Congress Will Avoid Sequestration

June 12, 2012 | By Lorna Aldrich |

Senator Carl Levin, chairman of the Senate Armed Services Committee, said Congress will ``find a way out'' of legislated, across-the-board budget cuts in January known as sequestration.

Levin, a Michigan Democrat, said at a June 12 Newsmaker that even without sequestration, he expects defense budget cuts of about $10 billion per year over 10 years.

When sequestration is avoided will be as important as whether it is, Levin said. If action comes too late, there could be "severe" effects on the economy, he said, adding that consumers and businesses need to plan.

His co-panelists -- James E. Cartwright, retired vice chairman of the Joint Chiefs of Staff, and David H. Langstaff, president and CEO of TASC, Inc. -- suggested guidelines for making decisions within the budget constraints.

Presidents Reagan, George H.W. Bush and Clinton achieved smaller deficits by using increased revenue for 40 to 50 percent of the reduction, Levin said. "Additional revenue is the real challenge," he said.

Revenue options include closing loopholes in the tax code and restoring the top income tax rate to around 39 percent, which is the level that existed before President George W. Bush's tax cuts, Levin said.

Cartwright said a key issue is retaining a volunteer army that expects good equipment and good training. Cartwright recalled watching troops leave for deployment equipped with iPads and droids. He quoted a sergeant as saying he would as soon deploy without his rifle as without the technology.

Langstaff said government should stop racing to the lowest cost and instead consider value. Government should also consider business as a source of innovation, not just a potential source of labor, he said.

Government should also contract for whole systems rather than for indiuvidual components, Langstaff said. Systems engineering can be as useful for deconstructing efficiently under budget constraints as for constructing, he said.

Uncertainty about the budget is prompting companies to delay decisions and hoard cash, Langstaff said. "There is paralysis on the industry side," he said.