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Carter said he had asked the military services to produce detailed plans by February 1 to say what they are doing to reduce short-term spending before roughly $45 billion in new cuts are due to go into effect on March 1.
He asked for detailed long-term planning by February 8 on how the services will handle the $45 billion in across-the-board cuts, which will go into effect on March 1 unless Congress agrees on an alternative package of spending reductions.
The Pentagon currently is absorbing $487 billion in cuts to projected defense spending over 10 years that were agreed in the Budget Control Act of 2011. That law also required the additional across-the-board cuts by January 1, 2013, unless Congress agreed to an alternative.
Lawmakers failed to reach a new deal but did agree to postpone the across-the-board cuts until March 1 to give themselves more time. But March 1 is five months into the fiscal year, giving the Pentagon less time to absorb them.
Defense officials had long resisted taking action in response to the threat of a new round of automatic budget cuts, saying they were put in place to try to force Congress to reach alternative spending reductions.
But Carter said the debate surrounding U.S. financial issues in late December had been "sobering," with little attention paid to the effects of the new cuts on the Pentagon or its mission. And the decision to postpone the cuts for another two months also reduced the time the department would have to respond.
"When we were marching up to January 1 we had more runway, more time to absorb cuts if we had to absorb cuts," Carter said. "Now we're running out of time and so for those two reasons, our risk calculus has to change at this point and we need to begin acting."
The Pentagon's budget mess has been further complicated by the congressional failure to allocate funding for the Pentagon's budget for the 2013 fiscal year, which began October 1. The department is currently operating on a continuing resolution that maintains funding at 2012 levels.
"The problem is that the money is in the wrong pots," Carter told reporters. He said the Pentagon had planned to spend considerably more for operations and maintenance in 2013 than it did in 2012.
"We don't have enough money to operate the forces in the way we thought we were going to," Carter said. "That's the problem. And that's a more than $10 billion problem. And we're running out of time to eat that $10 billion and that's the reason that we need to act now."
To slow the rate of spending, the department has put a freeze on civilian hiring, he said. Usually the department hires 1,000 to 2,000 civilians a week, about 46 percent of them military veterans and 86 percent of them living and working across the country, not in Washington.
The department's 46,000 temporary and contract employees are "all now subject to release," Carter said, meaning they will either be let go now or will not have their contracts extended. The only exception would be if they are performing jobs critical to the war or the department's basic mission.
The department also is cutting back on base and equipment maintenance, which costs about $15 billion per year. He said the Navy would cancel maintenance on 30 ships that had been planned for the third and fourth quarters this year.
"They're not going to sign those contracts with the shipyards that do that work," Carter said.
He said the Air Force would only enter into short-term contracts for supplies.