If the federal government’s automatic sequestration cuts kick in as scheduled in January, the Defense Department would avoid laying off civilian employees. But that doesn’t mean civilian feds can breathe a sigh of relief.

Under sequestration, military personnel salaries would be completely protected. But because of the complex mechanics of how the automatic budget cuts would work, the operations and maintenance accounts that fund most civilian employee salaries would take a disproportionate hit compared with other buckets of money in DoD. A recent analysis by the Center for Strategic and Budgetary Assessments estimated that DoD would lose funding for 108,000 full-time equivalents.

But Robert Hale, the Pentagon’s CFO and comptroller, told Congress Thursday that sequestration won’t mean full-on layoffs in DoD for a simple reason: Reductions in force generally obligate the government to pay severance and other separation benefits, so the Pentagon believes RIFs would cost more than they’d save. DoD therefore would have to find ways to cut spending on civilian feds in other ways.

“Our civilians would be directly affected. We’d probably have to have a hiring freeze and I suspect we’d have to consider unpaid furloughs,” he said. “This is starting to create a lot of unease in our workforce about how this is going to affect individuals, and I don’t blame them. I’m very worried for them.”

Civilians concerned across DoD

Gen. Joseph Dunford, the assistant commandant of the Marine Corps, said he sees the same worry in the workforce.

“There is significant angst among our civilian community, our civilian marines as we call them, about their future. It concerns us a great deal,” he said. “What they do is important. They fix our equipment, they train our people, they take care of our families. I think the way we treat them and our ability to provide them some predictability about their future is also important. Those are the concerns I have.”

While military personnel accounts are exempt from the sequestration cuts, that protection applies only to paychecks. Readiness, modernization and operating accounts would be cut, and Dunford said that would ultimately affect the size of the Marine Corps. The service, he said, would elect to give up force structure if it could no longer afford to properly train or equip those forces.

“It would be impossible for us to balance the pillars of readiness and maintain our end strength of 182,000 beyond 2013,” he said. “What the commandant has really said is that once we find out what our top-line budget is, we’ll build the best Marine Corps we can build. But we have to do it in a balanced way so that we don’t have more marines than we can train, equip and take care of their families.”

The vice chiefs of each of the military services expressed worry about family and service member support programs when DoD officials testified at Thursday’s hearing of the House Armed Services Committee.

Medical benefits at risk

Those programs would be subject to sequestration, as would plenty of other personnel-related functions, including military healthcare. Hale said it’s possibility that military members, their families and retirees could face denials of service from medical providers in the TRICARE system.

“The Defense Health Program is a budgetary account, and it would receive the same 9.4 percent reduction as all the other accounts. If that actually came to pass, the only thing we could do is to try to reprogram money from other accounts, but then you’ve got to find something else to cut. Based on my experience over the last four years, that’s very hard to do,” he said. “I think we would be faced with not being able to pay all of our TRICARE bills by the end of 2013. I’m not quite sure what our providers would do in that case. We’d just be late on our payments and we’d try to fix it in 2014, but it’s not a good situation and it’s not something I want to go through.”

Congress created sequestration to end a political standoff over raising the nation’s debt ceiling in the summer of 2011. The idea was to implement across-the-board spending cuts totaling $1.2 trillion across all discretionary programs over the next 10 years so Congress would force itself to find the same amount of deficit reduction in a more thought-out way. That hasn’t happened yet, and the cuts are set to take effect on Jan. 2.

There have been no signs of a bipartisan agreement so far, but Sen. Lindsay Graham (R-S.C.), who serves on the Armed Services Committee, offered a small glimmer of hope earlier in the day when he spoke at an event hosted by Politico.

He said he and several senators including John McCain (R-Ariz.), Carl Levin (D-Mich.), Kelly Ayotte (R-N.H.) and Jeanne Shaheen (D-N.H.) are in talks that would avert sequestration for at least a while.

“We’re trying to find a way. I think a mini-Simpson-Boles deal is probably what’s available to us,” he said. “When we come back in the lame duck session I don’t think we’re going to have a grand bargain. So what we’re trying do is come up with a deal to cut some additional defense spending, close some loopholes and deductions and find a way to reform entitlements for about a four month period. It’s about a $30 billion exercise, and it’s eminently doable. The goal is if you can get the formula to offset four months of defense cuts, maybe that gives you the confidence to do a bigger deal next year.”

Any deal — short or long term — isn’t likely to be settled anytime in the next couple months. Congress is planning to take another extended recess starting Friday and won’t be back for votes until after the presidential election.

Several members said Thursday however they’d like to stage a rebellion against that schedule and force Congress to stay in session until sequestration is undone.

“I’m going to vote no on the adjournment resolution,” said Rep. Rob Andrews (D-N.J). “To walk away from our responsibilities without making some effort to pass some legislation the president could sign we’ve heard chapter and verse about the consequences of sequestration is not very responsible. But this institution’s response to the problem is to leave town for six weeks.”

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