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Behind-the-scenes sequestration talk revealed in San Diego

The man tasked with defending San Diego’s strong military position from more than 2,000 miles away finally broke his public silence on Wednesday, dishing the inside scoop on politicians and their stance on sequestration.

Bill Cassidy, former deputy assistant secretary of the Navy and head of Washington, D.C.-based consulting firm Defense Conversion Resources LLC, is being paid to lobby in the nation's capital on behalf of San Diego.

He spoke at a sequestration panel organized by the San Diego Military Advisory Council at Point Loma’s Naval Mine and Anti-Submarine Warfare Command, sharing what he’s seen, read and heard in the nation's capital as it relates to budget concerns.

Planned federal cuts will reduce overall defense spending by $487 billion.

If the Budget Control Act’s sequestration mandate takes effect on Jan. 2, an additional $1.2 trillion in cuts will kick in across the government unless Congress and the administration agree on a solution.

“The bottom line is nobody knows how this is going to come out. It is very, very difficult to predict,” said Cassidy, to a packed house of defense contractors and military personnel.

The defense sector stands to feel the brunt of sequestration, or more than $500 billion in reductions, over 10 years.

Cassidy laid out two big-picture issues that illustrate the gravity and complexity of the matter in front of the administration and Congress.

In January, the Department of Defense issued a strategic guidance to shift a focus toward the Asia-Pacific -- but that strategy assumes there will be no cuts beyond the $487 billion.

“The Secretary of Defense has said that sequestration will force the department to shed missions, commitments and capabilities that constitute the core of the national security strategy across the U.S.,” Cassidy said.

The current $16.4 trillion debt ceiling has to be dealt with in early 2013.

“Secondly, sequestration has to be dealt with by early 2013,” Cassidy said.

Other agenda items relate to individual income tax rates, capital gains tax rates, dividend tax rates and state tax exemptions.

“That’s the playing field that has to be resolved or addressed in some fashion by early 2013,” he said. “These are really going to be tough issues for the administration and Congress to deal with.”

As far as the time frame goes for addressing sequestration, nothing will happen before the election, he assures.

“Absolutely nothing. So that moves us to the 'lame-duck' session [starting Nov. 13]," he said.

Conventional wisdom says that post-election, Congress will be free of any political pressures and be able to rationally sift through the issues to reach an amicable resolution.

“The problem is that if neither party emerges with a clear mandate and large majority, we are right back to where we are now. Nothing will change," Cassidy said. "Those who held positions before Nov. 6 will hold the same position after Nov. 6.”

No matter which candidate wins the election, Cassidy believes it will be very difficult to reach any agreement on large issues by Dec. 31, or the so-called "drop dead date."

House Speaker John Boehner (R-Ohio) is pessimistic about the likelihood of reaching a large deal agreement by year’s end.

“It’s his view it’s not only too hard to reach an agreement by Dec. 31, but it would be wrong for the country," Cassidy said.

He quoted Boehner, explaining his mentality: “I am not sure it’s the right thing to do. You have a lot of retiring and defeated members voting on really big bills – it’s probably not the appropriate way to handle the lame-duck.”

Boehner’s position is that lawmakers, by virtue of retirement or having been defeated, have one foot out the door and shouldn’t be making major decisions for the nation.

“That’s where he stands,” Cassidy said. “It suggests to me he is ruling out a massive resolution deal by the end of the year.”

What could happen before the end of the year, he said, is some kind of short-term resolution being reached.

“This could occur before or after Dec. 31. Or it could not occur at all. No one knows, but it seems to me that is a possible outcome,” Cassidy said.

There are two groups in the Senate discussing possible plans to resolve the issue. One is to make a $55 billion down payment on the debt and buy six months of time to reach a bigger decision. Another is to raise revenue to offset defense spending.

The U.S. House of Representatives OK’d a Republican-sponsored bill that would exempt military cuts from the automated budget cuts and instead put domestic programs on the chopping block.

San Diego Mayor Jerry Sanders gave strong opening remarks at the Wednesday panel, saying he’s “discouraged” that members of San Diego’s Congressional delegation are pointing fingers at each other on the issue.

“This is a time we need leadership. Elected officials need to step forward,” Sanders said. “It’s no longer OK to push around as a political issue for campaigning. We are talking about people’s lives, jobs and the ripple impact on the entire economy. It’s not OK for Congress to say we can’t figure this out.”

The Navy will feel a $12 billion reduction in fiscal year 2013, but the impacts felt on the Marine Corps will be much worse.

“The Marine Corps has a very serious problem, because of their small size and small budget, this would be extremely difficult for them,” Sanders said.

Both services would suffer reductions in training for non-deployed forces, flight hours, fleet maintenance and funding for research and development, test and evaluation.

Military construction, military family housing and funds available for military health care, known as Tricare, will also take hits.

Sequestration, Sanders said, would directly affect many of the people in the room on Wednesday night in the form of unpaid furloughs and hiring freezes.

"It seems there is a consensus that if it occurs it will hit federal civilian employees of the DoD the hardest,” Sanders said.

San Diego could lose between 20,000 and 30,000 jobs as a result of sequestration, according to Duncan Hunter, a former member of Congress, former chairman of the House Armed Services Committee and father of Rep. Duncan D. Hunter, during a press conference in May

Even if sequestration is avoided or resolved, that is not the end of the challenges that lie ahead, he warns.

Sen. Carl Levin (D-Mich.), Chairman of the Committee on Armed Services, has a proposal to slash $100 billion on top of the $487 billion.

“It seems regardless of what happens on Nov. 6, the defense budget is in for some rough waters,” he said.

Cassidy’s contracted services run through the end of December — just days before the sequestration cuts would occur. A group of San Diego executives, spearheaded by downtown real estate developer and philanthropist Malin Burnham, are footing the bill.

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