Obama Defense Budget Ignores Current Fiscal Reality (UPDATED)

President Obama sent to Capitol Hill a fiscal year 2014funding request of $615.1 billion for the Defense Department — a $526.6 billion base budget and $88.5 billion for war costs — that ignores spending restrictions that Congress set in the Budget Control Act.
The law would cap the Pentagon’s base budget at $475 billion in 2014, and mandates cuts in future military budgets of about $50 billion every year until 2021. By contrast, the president is seeking steady increases in defense spending over the next five years.
The administration projects a Defense Department base budget of $540.8 billion for fiscal year 2015, $551.4 billion for 2106, $560 billion for 2017 and $568.6 billion for 2018. Although these numbers show increased defense spending, for the Pentagon these top-line projections are viewed as cuts because they are measured against last year’s request. If the BCA spending caps were strictly enforced, the Pentagon would be looking at far smaller numbers. In 2013, the Defense Department had requested $525.4 billion and, after sequester, it will be allowed to spend $492.9 billion.
The 2014 budget request “implicitly is placing its faith in Congress to lift the budget caps or make the necessary cuts in the Defense Department’s request to fit within the caps,” said Todd Harrison, senior analyst at the Center for Strategic and Budgetary Assessments.
Pentagon officials acknowledge that this budget is being submitted amid “great uncertainty regarding top-line and the effects of the fiscal year 2013 sequestration,” according to briefing slides released April 10. The military is still coping with mandatory cuts of $41 billion that have to be implemented by Sept. 30. All programs are affected, except military personnel accounts, wounded-warrior initiatives, Afghanistan war operations and nuclear deterrence efforts, which were exempt from the automatic cuts.
With regard to the breakdown of the $526.6 billion request for 2014, it is business as usual. It includes $137 billion for military personnel, $210 billion for operations and maintenance, $99.3 billion for procurement, $67.6 billion for research and development, $9.5 billion for military construction, $1.5 billion for military housing, and $2.3 billion in “revolving funds.” The Army’s share is $129.7 billion, the Navy and Marine Corps’ $155.8 billion, the Air Force’s $144.4 billion and $96.7 billion for Defense Department agencies.
The president’s budget request always is subject to House and Senate revisions but this year’s proposal is unprecedented in that it starts out $52 billion higher than what Congress authorized.
Obama is hoping for a comprehensive deal that would do away with the budget caps, allow the federal government to spend $3.77 trillion in fiscal year 2014 and reverse the $1.2 trillion in automatic sequester cuts during the next decade. The defense budget under current law must absorb half of those reductions. The administration is proposing an alternative plan to cut the federal deficit by $1.8 trillion during the next 10 years with a mix of higher taxes on the wealthy, reduced rate of growth of Social Security and Medicare and $200 billion in discretionary spending reductions, half of which would come from the defense budget.
Analysts have characterized Obama’s budget as a political statement, rather than a realistic spending blueprint. The House and Senate budget resolutions that were passed in recent weeks also have been dismissed as symbolic documents that reaffirm each side’s stance.
A broken budget process in Washington only spells more disruption for the Defense Department, as it will likely begin the 2014 fiscal year Oct. 1 with no definitive budget and will continue to live under a cloud of uncertainty, Harrison said last week. The underlying issues that have kept Washington in permanent crisis mode have not been resolved, he said. Both sides want to reduce the deficit. Both sides say they want to avoid abrupt defense cuts. But they cannot agree on alternative means for reducing the deficit. A grand bargain where both sides would compromise on a mix of spending cuts and tax increases appears elusive, he said. “I’m not confident that they will reach a deal between now and Oct. 1.”
The Pentagon’s long-term plans to “rebalance” its forces to focus on the Asia-Pacific region could remain in a holding pattern until the budget impasse is resolved. “DoD must constantly examine the choices that underlie our defense strategy, posture and investments,” according to Pentagon briefing slides. A senior group led by Deputy Defense Secretary Ashton B. Carter is studying the potential impact of budget cuts on the “pivot to Asia” strategy. The group will report back to Secretary Chuck Hagel May 31.
Chairman of the Joint Chiefs of Staff Army Gen. Martin Dempsey told the Senate Armed Services Committee Feb. 12 that, if sequestration occurs, it will “severely limit our ability to implement our defense strategy.” In a speech in Washington this week, Carter insisted that the Defense Department is not backing away from the strategy, even in the face of budget cuts. But if sequester cuts continue beyond 2013, plans might have to be scaled back, he warned. Carter said he hoped the “turmoil and gridlock will end, and the U.S. can get back to what you might call a normal budget process.” The results of Carter’s review will influence the fiscal year 2015 budget and will shape the quadrennial defense review due to Congress in February 2014.
Hagel, for his part, has called for “fundamental changes” in Defense Department spending priorities. In a speech at the National Defense University, he warned that today’s sequester cuts could be the beginning of a steeper downturn. “A combination of fiscal pressures and a gridlocked political process has led to far more abrupt and deeper reductions than were planned for or expected,” Hagel said April 3. To soften the impact of the sequester — and of whatever other fiscal blows might come — the Defense Department must set priorities, he said. That would prepare the Pentagon to “deal with further reductions in the defense budget that could result from a comprehensive deficit reduction deal or the persistence of sequester level cuts.”
Harrison and other budget experts have suggested the Pentagon soon must begin to tackle soaring compensation costs, bloated overhead expenses and dysfunctional weapon-acquisition programs.
Update: Pentagon Comptroller Robert Hale said the FY2014 request for war costs is not final. The $88.5 billion in DoD budget documents released April 10 is a "place holder" and a revised request will be sent to Congress in about a month.
Photo Credit: Defense Dept., Office of Management and Budget

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