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By DAVID FRANCIS, The Fiscal Times
June 14, 2013

Defense Secretary Chuck Hagel told lawmakers Wednesday that the sequester, along with continued budget uncertainty, was making it difficult for the Pentagon to properly plan and prepare to confront 21st century threats.

“We are now in a different fiscal environment dealing with new realities that will force us to more fully confront these tough and painful choices, and to make the reforms we need to put this Department on a path to sustain our military strength,” Hagel told the Senate budget committee. “The onset of these resource constraints has already led to significant and ongoing belt-tightening in military modernization, force structure, personnel costs, and overhead expenditures.”

Hagel said the Pentagon would be forced to make cuts to personnel benefits, reduce force size, and delay training of new recruits. But some of the most dramatic cuts are expected to occur in the acquisitions budget, which pays contractors for the machinery they produce and the services they provide.

Earlier in the year, there was concern that the $43.2 billion removed from DOD’s budget this year combined with an additional $600 billion over the next decade, would hamstring the broader economic recovery. As the chart below shows, DOD spending accounts for nearly 6 percent of gross domestic product.

Defense spending as a percentage of GDP

Hubert van Tuyll, a professor of economics at Georgia Regents University and co-author of Castles, Battles, and Bombs: How Economics Explains Military History, said he was not concerned about DOD dragging down the broader economy.

“When you have a big defense drawdown, it doesn’t really hurt the overall economy that much. But when you have a drawdown, the military establishment has to make a decision to lose people or equipment,” van Tuyll told The Fiscal Times. “It’s the equipment that will go first.”

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