Pentagon now preparing for massive cuts as fiscal negotiations appear stalled The Pentagon said Wednesday it is now preparing for billions of dollars in budget cuts should President Obama and congressional Republicans fail to reach an alternative plan by Jan. 1. The move breaks from earlier statements that no plans were being made - a signal that difficulties reaching a deal are beyond the public stalemate or so-called "political theater" and that Washington officials are bracing for the worst. Pentagon spokesman George Little said the Office of Management and Budget instructed the department to begin preparing for the roughly $500 billion cuts over the next 10 years - a situation resulting from both sides failing earlier to reach a more measured approach to cutting the country's roughly $16 trillion deficit. Little said the department is looking for programs to cut and is developing a plan to announce possible changes to its millions of personnel. He also repeated that the cuts - known as "sequestration" - would be "devastating" and could result in major changes to national defense strategy, at least in the short term. "If we are going to be faced with the consequences of sequestration for a long period of time..., then at a certain point we may have to look at the defense strategy at least in the near term," Little said. He also said the Pentagon would be forced to slash personnel across the services. Military salaries will not be impacted because Obama exempted them in July 30. However, pay raises could be affected, Little added. The Pentagon has yet to tell defense contractors about possible plans to eliminate programs or contracts. Little said not all of the cuts would take effect January 3 and that the Pentagon will have a few months next year for additional planning and decision making.