BUDGET

The Defense Budget Showdown

8/1/2015
By Jon Harper
Funding for the Defense Department in fiscal year 2016 remains clouded with uncertainty as President Barack Obama and the GOP continue to spar over the federal budget.

Both sides essentially agree on how much money the Pentagon should get.

For 2016, Obama requested $534 billion for DoD’s base budget plus an additional $51 billion for overseas contingency operations, for a total of $585 billion. The president’s base budget request blasts through the sequestration caps that limit base spending to approximately $498 billion.

In their respective National Defense Authorization Acts, the Republican-controlled House and Senate left the sequestration caps in place for defense and non-defense discretionary spending. However, they essentially maneuvered around the limits on defense by beefing up OCO funding — which does not count toward the caps — to about $89 billion. The big OCO boost would yield an authorization of approximately $585 billion. The House and Senate appropriations committees took a similar approach in their bills.

The White House has criticized the use of OCO money to get around budget caps and threatened to veto the GOP-driven legislation if Congress doesn’t lift spending caps for both defense and non-defense discretionary spending.

“The president has been clear that he is not willing to … accept fixes to defense without fixing non-defense,” the White House said in a June statement about the Republican-driven legislation.

A government shutdown looms if the parties can’t reach an agreement or pass a short-term continuing resolution to fund federal agencies by Oct. 1, the beginning of the next fiscal year. But analysts see that outcome as unlikely in light of the political fallout from the 2013 shutdown.

“The bar to having just a continuing resolution is not that high,” said Ryan Crotty, a defense budget expert at the Center for Strategic and International Studies, a Washington, D.C., think tank. “The experience of the government shutdown last time lends me to believe that if it gets up to the 11th hour, a [short term] CR remains pretty easy and that that will be what happens.”

Pentagon officials are hoping that some sort of deal can be reached to avert the return of sequestration, which would cut tens of billions of dollars annually from the Pentagon’s budget request through 2021. Deputy Secretary of Defense Bob Work said he is now “more confident” that a political agreement can be reached similar to the Murray-Ryan deal of 2013 that gave the Pentagon some relief from sequestration but fell short of what the Defense Department was asking for.

He cited Obama’s veto threats — and recent indications that those vetoes could be sustained — for his newfound optimism.

“From the Defense Department’s perspective, all we are trying to do is … encourage us getting to a Murray-Ryan type budget agreement. … But I am not certain where that will come out, and so for the next several months everyone in the Department of Defense will hold their breath and see how this debate plays out in Congress,” he said in June at a GEOINT conference in Washington, D.C.

Six CSIS defense experts recently weighed in on the budget standoff, with half of them anticipating an eventual “Murray-Ryan 2.0” agreement, and half predicting continued political gridlock eventually culminating in a CR that lasts through the remainder of fiscal year 2016. None of them expect a budget deal to be in place by Oct. 1.

“The politics of the presidential election drive the outcomes here,” wrote Clark Murdock, a CSIS analyst who predicts a year-long CR. “Both sides avoid the ‘third rail’ of a government shutdown; neither side gives a ‘win’ to its opponents. So [there will be] no grand bargain or even Murray-Ryan 2.0.”

A full year CR would fund the Pentagon at 2015 levels — $496 billion in base spending — which would be about $2 billion below sequestration caps.

Topics: Defense Department, DOD Budget

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