Furlough threat hangs above Defense employees

It won't feel much like Christmas for more than 100,000 Defense Department civilian employees who might get furlough notices in their stockings this year.

The threatened layoffs are part of the Pentagon's widespread public campaign to prevent any further delay in appropriating money for combat operations in Iraq and Afghanistan. But some former government insiders and lawmakers say the Bush administration is merely resorting to scare tactics to persuade Congress to expedite approval of the money.

The military is, in effect, already trying to pay out of pocket for a war that is costing more than $10 billion a month. Congress is not expected to pass the wartime supplemental spending bill until after it reconvenes in January, forcing Pentagon planners to work budgetary magic to keep money for the war flowing.

Skeptics argue that the Defense Department, which has an already approved $459.6 billion for its regular spending accounts this year, has more wiggle room in its budget to pay for the war than officials are letting on.

"I've been to this movie a lot of times," said Gordon Adams, deputy Office of Management and Budget director for national security programs in the Clinton administration. "I've even played a bit part." The Pentagon's warnings amount to a "giant game of political chicken," he added. "It's just kind of sad they're doing it on the back of the civil servants."

Adams and Lawrence Korb, a senior fellow at the Center for American Progress and the Pentagon's personnel chief during the Reagan administration, both said they think civilian layoffs and other drastic measures are not necessary -- for the time being, at least.

These former officials recommend transferring funds from other Defense accounts, including money tagged for the other military services, to cover war costs until a supplemental spending bill is enacted.

Those money moves include dipping into the other services' working capital funds, umbrella accounts that pay for commercial and industrial activities.

The department also could transfer the financial responsibility for cross-service wartime logistics and other contracts from the Army to the other services.

Adams estimates that those steps, which do not require congressional approval, could free up almost another $8 billion for the war -- which could delay the need for layoff notices (required 60 days in advance of any actual layoffs) until well after the holidays.

The Defense Department's statements in recent weeks are "really exaggerating what may happen and trying to scare people," Korb said. "I think it's really, really playing on people's fears, given the situation."

On Monday, Senate Majority Leader Harry Reid, D-Nev., dismissed the warnings as "hype" from the White House. "The president's spin machine is going," he added.

Also Monday, eight lawmakers -- including two Republicans -- from Virginia, Maryland and Washington, D.C., told Defense Secretary Robert Gates in a letter that they "adamantly disagree" with furloughing civilian employees.

"We believe that the Army and DOD possess budgetary procedures and have statutory authority to avoid furloughs and termination of contracts well into 2008," added the lawmakers, whose districts include many federal employees.

These lawmakers estimated that budgetary maneuvers could free up money for operations until mid-April, two months later than the Pentagon says, "thereby delaying the need for furloughs farther into the next calendar year, by which time supplemental funds may be enacted."

But senior Defense officials questioned the lawmakers' calculations, stressing that fund transfers would only buy the department a few weeks, not months.

The temporary relief is not worth the heartburn and second-degree budgetary effects they would cause, they said.

"It does not do enough to solve the problem to be even worth all the pain and the effort," said one of them.

Part of the problem is that the Pentagon has only a very limited pool of funding in its annual budget from which to draw to pay for ongoing operations.

The Army, which bears the brunt of the war costs, plans to tap into its operations and maintenance accounts, which total $27 billion, to pay for the war.

The service also plans to use $800 million in the Army's working capital fund and has requested $3.7 billion in reprogramming authority from other military accounts -- the maximum amount allowed by law.

Army officials have said that all that funding will dry up by Feb. 23, 2008. "There is just so much restriction and micromanagement [of the Defense budget] that what it's done is it's changed the mentality of how the department does things," said Dov Zakheim, a former Pentagon comptroller in the Bush administration.

Congress has long been "persnickety" about moving money from one account to another, raising questions about whether they would allow the Defense Department to reprogram more funding than the $3.7 billion now allowed under law, Zakheim added.

But one senior Defense official warned that giving the Pentagon more transfer authority would make planning for the third and fourth quarters of the fiscal year difficult.

This official also argued that "little gimmicks" are not going to solve the military's problems. In short, the official said, the department needs an enacted war spending bill. "It's like trying to refill one of these drought-starved lakes with a bucket," the official added.