Only a Big Budget Deal Can Save Defense From Fiscal Chaos

Pentagon civilian leaders, contractors and lobbyists who would like to see more predictability in the military’s budget should start looking beyond the parochial interests of the defense sector and take a broader view of the nation’s fiscal troubles, a veteran Washington insider advised.
Since the president unveiled last week his $526.6 billion military budget proposal for fiscal year 2014, one of the story lines has been the administration’s refusal to lower spending in accordance with the caps set by Congress in the 2011 Budget Control Act. Another dominant topic has been the impact of automatic sequester cuts on the military in 2013 and thecontinued uncertainty about another possible round of automatic cuts in 2014.
Defense issues can no longer be discussed in a vacuum, said Jim Dyer, principal at the Podesta Group and a former staff director of the House Appropriations Committee who specialized on foreign policy and defense issues.
“If we are going to worry about defense, we also have to worry about nondefense” spending, Dyer said April 17 during a panel discussion at the Center for Strategic and International Studies.
Underlying the 2014 budget request for the Defense Department — which is $52 billion higher than the top line set by Congress in 2011 — is an expectation that lawmakers will undo the current law so the Pentagon’s budget can be liberated from the caps.
That will never happen unless there is a deficit-reduction “big deal” compromise that also removes caps for nondefense discretionary spending, reforms entitlement programs and generates more tax revenue, Dyer said.
The House and Senate budget resolutions passed last month are “instructive,” said Dyer, because they illustrate how far apart both sides are. The difference between the two is about $100 billion, but to narrow the gap, the ideological schism that has kept Washington in permanent crisis mode for the past two years has to be resolved. Democrats want to offset cuts with new revenues, and Republicans want to cut domestic social programs to pay for defense and to avert any tax hikes. The House set a maximum spending limit of $966 billion, and the Senate’s ceiling is $1.058 trillion. Many Republicans, meanwhile, want spending to be capped at sequester levels of $974 billion. The House budget, Dyer said, “set a number for defense that everyone can live with,” but makes draconian cuts to nondefense discretionary spending that are non-starters for Democrats.
“The House discretionary number is lower than the number we had for discretionary programs pre 9/11,” Dyer said. The defense community has been blind to the larger picture of national priorities, he said. Pentagon officials and contractors should make a case that if sequester is bad, it is bad for everyone, he said. “To bake the sequester into nondefense and address the next defense budget pretending there is no sequester to me makes no political sense unless you believe it’s defense and nothing else in the world.”
Security commitments and the war on terror are important, but there are other national priorities that demand resources, he said. “There is a war on poverty, a war on disease, a bunch of wars that we have to fight.”
Unless discretionary nondefense concerns are addressed, he said, “We are not going to make any progress this year” in reaching a budget deal. The Pentagon despises sequester across-the-board cuts because they take away the flexibility to prioritize, but politicians are now sticking with sequester precisely because it protects them from making choices, Dyer noted. “Last year I couldn’t find a politician who was not saying sequester will never happen and was a terrible thing,” he said. But it happened mostly because defense and nondefense interests failed to come together to avert it. “Republicans believed it was the only leverage they had on a Democratic administration to get them to the table to talk about spending cuts. … Democrats believed that by cutting defense they could get Republicans to scream uncle. … Everybody was wrong.”
Small budget deals haven’t accomplished much, Dyer said. “No community in this town needs a big deal more than the Defense Department,” he told the audience at CSIS. “My friends, I will guarantee you, if we cannot drive a big deal that cleans up our revenue code, that controls our entitlement spending and that sets acceptable discretionary spending limits, what we will have” is a defense budget that will for years remain vulnerable to “nicks and nibbles,” Dyer said.
Every year, when nondefense accounts fall short, Congress will dip into defense coffers simply because that is where the discretionary money is. “If you think the current instability and uncertainty are troublesome, then prepare for it over the foreseeable future,” he said. “Defense is too easy to get at. It accounts for 65 percent of the discretionary budget,” Dyer warned. “When all else fails,” Congress will take the politically safe road.
Dyer was baffled by the Obama administration’s offer to cut $100 billion from defense spending in fiscal year 2017. That is laughable, considering the government has for three years operated on temporary funding measures and even the Pentagon has lost its ability to plan for the long term. “We are in one-year linear budgeting,” Dyer said. “Long-range planning in this Congress is about one day at a time. … This is a very difficult time for anyone who lives and dies by numbers.”
Dyer’s advice to defense advocates: “If we are trying to produce a defense budget that is worthy of this country’s global leadership, we have to do more than just focus on the numbers in defense.”
Photo Credit: Center for Strategic and International Studies

Topics: Defense Department, DOD Budget, DOD Leadership, Government Policy