A new report on sequestration's impact on defense from the Bipartisan Policy Center:
Because of the structure of defense spending, our national security forces and defense industry have been able to continue operating under sequestration, but not without permanent damage. The full brunt of the cuts hasn’t hit yet, and if we go down the sequester path for too long, we won’t be able to reverse the devastating impacts. It isn’t primarily the size of either the federal budget or the defense budget that poses problems; it is the dramatic change in the composition of those budgets over the decade—entitlements are pushing out investments. And sequester worsens that trend.
Essential government services, especially in defense, are not being performed, and will not be if sequester continues. The combination of sequester cuts and unaddressed cost increases will erode force readiness, stall modernization, and reduce the fighting forces by at least 50% by 2021. The impact of the defense sequester on spending, which drives the economic impact, will double in FY 14 and triple in FY 15, compared to FY 13.
Here's the report.