Panetta: Defense Budget Cuts Will Damage Economy

End Of Days News

Defense Secretary Leon Panetta on Wednesday laid out a grim list of spending cuts the Pentagon will have to make in the coming weeks that he said will seriously damage the country's economy and degrade the military's ability to respond to a crisis.

Slamming members of Congress as irresponsible, Panetta said lawmakers are willing to push the country off a fiscal cliff to damage their opposing political parties.

He said that if Congress doesn't pass a budget the Pentagon will have to absorb $46 billion in spending reductions in this fiscal year and will face a $35 billion shortfall in operating expenses.

"My fear is that there is a dangerous and callous attitude that is developing among some Republicans and some Democrats, that these dangerous cuts can be allowed to take place in order to blame the other party for the consequences," Panetta said in a speech at Georgetown University. "This is a kind of 'so what?' attitude that says, 'Let's see how bad it can get in order to have the other party blink'."

In separate, highly detailed memos sent to Congress, the military services described widespread civilian furloughs, layoffs and hiring freezes that will hit workers all around the country. Overall, the military will furlough 800,000 civilian workers for 22 days, spread across more than five months, and will lay off as many as 46,000 temporary and contract employees.

The Navy says it will cease deployments to South America and the Caribbean and limit those to Europe.

The Air Force warned that it would cut operations at various missile defense radar sites from 24 hours to eight hours. And the Army said it would cancel training center rotations for four brigades and cancel repairs for thousands of vehicles, radios and weapons.

"These steps would seriously damage the fragile American economy, and they would degrade our ability to respond to crisis precisely at a time of rising instability across the globe," Panetta said, adding that the self-made crisis "undermines the men and women in uniform who are willing to put their lives on the line in order to protect this country."

In addition to all of the more immediate cuts, U.S. troops are also likely to see a smaller pay hike next year than initially planned, due to strains on the budget. According to a defense official, the Pentagon will recommend that the military get a 1 percent pay increase in 2014, instead of a 1.7 percent raise.

The Georgetown appearance was likely one of Panetta's last speeches. He is set to leave the Pentagon this month. Former Republican senator Chuck Hagel has been nominated to take his place and a vote by the Senate Armed Services Committee is expected this week.


Read Latest Breaking News from Newsmax.com http://www.moneynews.com/StreetTalk/panetta-Defense-Budget-economy/2013/02/06/id/489181#ixzz2K97pR94k

Something is getting ready to go down folks!

Germany’s central bank is set to reclaim some of its vast gold reserves held in the US and France. The move follows an audit criticizing Bundesbank for mismanagement, stating the funds had never been “verified physically.”

Bundesbank announced plans to withdraw its entire 374-ton store of gold bullion from the Bank of France in Paris, and 300 tons of the 1,500 tons currently held by the New York Federal Reserve.

The German government refrained from commenting on the reports ahead of its presentation of a new plan for the management of its gold reserves on Wednesday. Germany boasts the world’s second-largest bullion reserves at 270,000 gold bars ($177.5 billion), second only to the US.
Germany’s gold stockpile was relocated abroad during the Cold War amid fears of a possible Soviet invasion. There is no reason now to maintain overseas stockpiles, Bundesbank said – from now on, the bank will only keep small amounts of gold abroad for trading purposes.
About 30 percent of Germany’s gold reserves are currently being held in the country at the facilities of Frankfurt-based Bundesbank.
"Now, the political security situation has changed because the East-West conflict is over. Considerations to store the gold as far west and as far from the Iron Curtain as possible had to be reconsidered," Bundesbank board member Carl-Ludwig Thiele told reporters on Wednesday. He added that gold was an important resource “to create confidence in the currency and in the economic power of our country."
The move follows a damning report by the German Court of Auditors criticizing the management of Bundesbank’s foreign bullion stockpiles. Auditors said that the stores “had never been verified physically,” and were not under proper control.
Bundesbank was taken aback by the criticism, stressing there was no need for speculation on Germany’s overseas holdings and that "there is no doubt about the integrity of the foreign storage sites." The central bank is widely regarded as one of the most trustworthy institutions in German society.
Veteran gold dealer Jim Sinclair said that Bundesbank’s strategy marked a change in trends in the global gold market, heralding a move away from paper administration of funds.

http://rt.com/news/germany-reclaims-gold-us-094/



Uncertainty grows over Pentagon budget



Permanently avoiding massive Pentagon budget cuts could prove difficult as Washington enters a fight over the nation’s borrowing limit, a coming political battle that will bring big federal spending cuts to the forefront.
The two-month delay to pending Pentagon spending cuts included in the last-minute fiscal cliff deal passed last week shows both U.S. political parties oppose the across-the-board cut to planned military spending through sequestration.
But it’s not that simple, as the two parties remain far apart on the details.
In fact, finding a mix of deficit-reduction components deemed politically appetizing to both could derail anti-sequestration efforts and trigger on March 1 the $500 billion, decade-long cut to projected Pentagon budgets.
The fiscal cliff-avoidance measure “doesn’t change a thing about sequestration, other than moving the goalposts a few, small steps,” House Armed Services Committee member Duncan Hunter, R-Calif., told Defense News through a spokesman. “Defense cuts might be delayed two months, but when that time comes, and it’s right around the corner already, we’re back at square one.”
For months, sequestration was tied to efforts to extend tax breaks for most Americans while raising rates on the highest earners. Now it will be part of what lawmakers and pundits say will be a nasty fight over the debt ceiling. And that, they agree, is a big problem for the defense sector.
“At this point, sequestration will probably only get the attention it deserves if it’s isolated from other big budget issues and dealt with separately,” Hunter said. “Otherwise, the outcome could be more delays and uncertainty, and whether we’re talking businesses or national defense, or anything else, that’s no way to budget.”
As the effort to avoid the sequestration cuts begins, the two parties appear very far apart on how to put together a suitable deficit-paring package.
Obama is insisting that new federal revenues be a part of a sequester-killing deal. The president on Dec. 31 said lawmakers must find both revenues and other cuts to offset any delay to the twin $500 billion defense and domestic cuts, saying the plan must be “balanced.”
But congressional Republicans say they will resist further revenue-raising measures beyond the high-earner tax hikes in the fiscal cliff bill. GOP members have long been resistant to anything that would increase federal revenues.
Instead, Republicans are salivating for the debt-ceiling fight, eager to battle Obama for big federal spending cuts.
“Democrats now have the opportunity — and the responsibility — to join Republicans in a serious effort to reduce Washington’s out-of-control spending,” Senate Minority Leader Mitch McConnell, R-Ky., said. “That’s a debate the American people want. It’s the debate we’ll have next. And it’s a debate Republicans are ready for.”
Former U.S. Comptroller General David Walker said last week during a television interview that “we’re going to see a big battle over spending as part of the debate over the debt ceiling and the [continuing resolution].”
What does that mean for the defense sector? “My guess is the odds of another delay have gone down and the odds of actually having a sequester have gone up,” said Todd Harrison, a senior budget analyst at Washington’s Center for Strategic and Budgetary Assessments.
For defense, the potential problem lies in a changing GOP ideology and simple math.
“Senator McConnell says spending now means entitlement programs,” said one former congressional aide. “What are you going to do, completely gut the non-defense part of the budget?”
Sen. Bob Corker, R-Tenn., said several times last week that Washington should immediately move to dramatically cut the costs of domestic entitlement programs.
But several analysts say cutting entitlement programs to get to deficit-reduction targets is not politically feasible.
That means the math likely will lead to some level of further Pentagon cuts if a deal is struck — or frustrated lawmakers walking away from talks and allowing the full $1 trillion in defense and domestic cuts to kick in.
Several sources said if they were either Defense Secretary Leon Panetta or Joint Chiefs Chairman Gen. Martin Dempsey, they would be very nervous with their massive budget tied directly to what will be a debate about the size of government and how much it should spend.
Heritage Foundation analyst James Carafano tweeted on Jan. 2: “Talk of more #fiscalcliff(s) starting [to] sound more like speed bumps to higher taxes, more government spending & bigger defense cuts.”
Hawkish lawmakers are banking that an ample number of congressmen will be mindful of Panetta’s warnings about the national security implications of sequestration, causing them to put aside worries about how to pay for the delay.
“The secretary of defense and the chairman of the Joint Chiefs of Staff have said they will be unable to defend this nation if sequestration happens,” Senate Armed Services Committee Ranking Member John McCain, R-Ariz., told reporters Dec. 31. “That’s good enough for me, and it should be good enough for anybody that’s negotiating.”
But analysts say the current House GOP caucus no longer includes military spending as an untouchable plank of its party platform. It has in many ways been replaced by an intense focus on cutting spending, shrinking the federal government and paring the deficit — by any means necessary.
“They came to Washington not to govern,” one former official told Defense News recently. “They came to Washington to burn down the castle.”
Gordon Adams of American University, who oversaw defense budgeting for the Clinton administration, offered another frightening scenario.
Pentagon funding currently exceeds spending caps put in place by the 2011 Budget Control Act. “If there’s no [sequestration] agreement by March 1, there will be a sequester. And the Pentagon and Energy Department would take a $42.5 billion cut,” Adams said. “That would bring the level of Pentagon and Energy spending below the cap.”

http://www.armytimes.com/news/2013/01/dn-uncertainty-pentagon-budget-010613/?utm_source=twitterfeed&utm_medium=twitter

Is America inching toward another Civil War?

 

 

The New Year has started with a monstrosity of a budget deal, one that proves that neither political party, Democrats or Republicans, is really serious about controlling the growth of big government. ...

Experience teaches that those who believe in free markets are right. The November election and the budget deal, however, show that the other side is winning, and winning big. ...

When the economy tanks and the government checks have to shrink, their only alternative is to take to the streets. That’s what happening in Argentina, and in Greece; and that’s where the growth of government is taking us here, as this current budget deal increases handouts — and more and more Americans are finding that an unemployment or Social Security disability check is their only life line.

Read more: http://times247.com/articles/is-america-inching-towards-a-second-civil-war#ixzz2Gyh6R6hb