The assessment by James R. Clapper was given last week in testimony to U.S. Senate and House committees.
"Sequestration forces the intelligence community to reduce all intelligence activities and functions without regard to impact on our mission," he told the Senate Armed Services Committee.
"Unlike more directly observable sequestration impacts -- like shorter hours at the (national) parks or longer security lines at airports -- "the degradation to intelligence will be insidious. It will be gradual and almost invisible until, of course, we have an intelligence failure."
About $4 billion is being cut from the National Intelligence Program this year because of sequestration, he told the House Intelligence Committee, adding that acquisition programs would be "wounded" and that ongoing programs will have to be curtailed.
Clapper's office this week disclosed that the 2014 budget request for the National Intelligence National Intelligence Program is $48.2 billion, but that the request doesn't include a funding request for overseas contingency operations, which is still pending.