Obama's Defense Budget Proposal Sets Stage for Major Battle With Congress

Defense Secretary Chuck Hagel is sending Congress a budget proposal for fiscal year 2015 with few sacred cows. He is recommending steep cuts across all branches of the armed services, he is truncating and terminating major weapon systems, and trimming popular military benefits.

The Defense Department is also asking Congress for continuing relief from the spending restrictions of the Budget Control Act that Congress passed in 2011. The military will shrink, said Hagel, but it cannot live with sequestration.

Congress spared the Pentagon from the legally mandated spending limits for 2014 and 2015. Hagel said the two-year reprieve, however, is not enough, as the military needs more time to adjust force size and programs. As a result, the Obama administration is asking Congress for $26 billion in additional funding for 2015, and another $115 billion from 2016 to 2019. The BCA set spending caps through 2021.

The 2015 funding level agreed to in the Bipartisan Budget Act, about $496 billion, is $45 billion below what the president requested a year ago, Hagel said Feb. 24 at a Pentagon news conference. "It is clear that under these limits the military will still face significant readiness and modernization challenges."

The $26 billion "President’s Opportunity, Growth and Security Fund" is needed in 2015 to shore up military training and readiness, Hagel said. The funds would be used for training, to upgrade aircraft and weapons systems, and repair facilities. The "opportunity fund" is part of a $58 billion package that the administration will seek for both defense and civilian agencies.

Beyond 2015, the Pentagon needs at least another five-year break from the BCA spending limits, said Hagel. "The scale and timeline of continued sequestration-level cuts would require greater reductions in the military’s size, reach and margin of technological superiority," he said. The administration's proposal, Hagel said, "provides a realistic alternative to sequestration-level cuts, sustaining adequate readiness and modernization."

The 2015 budget request, to be unveiled next week, sets the stage for a fierce battle with Congress, which remains deeply divided over spending and taxes.

Even if Congress does agree to ease BCA caps over the next six years, the Pentagon will not be spared from deep reductions, Hagel said. "This will be the first budget to fully reflect the transition DoD is making after 13 years of war."

The 2015 budget supports a military force that would be capable of defending the nation, said Hagel. The military’s new strategy, to be detailed in the upcoming Quadrennial Defense Review, will call for defending the homeland, ensuring global security by projecting U.S. influence, and remaining prepared to defeat any adversary if an armed conflict occurred.

Hagel insisted that the Pentagon had to make tough tradeoffs between people and hardware. "The development and proliferation of more advanced military technologies by other nations mean that we are entering an era where American dominance on the seas, in the skies, and in space can no longer be taken for granted," he said.

Reductions in troop strength and force structure are necessary in every military service — active and reserve, he said. Some modernization programs will be delayed or canceled in order to protect higher priorities in procurement, research and development, Hagel said. The 2015 budget also recommends slowing the growth of military compensation costs "in ways that will preserve the quality of the all-volunteer force."

The 2015 plan, he said, "balances the need to protect our national security with the need to be realistic about future budget levels." The Pentagon has also prepared an alternative BCA-compliant plan.

Highlights of the Pentagon's 2015 proposal:

• The administration will ask Congress for another round of Base Realignment and Closure in 2017. Hagel chided Congress for consistently blocking these requests "even as they slash the overall budget."
• Special operations forces will grow from 66,000 to 69,700 personnel.
• The Joint Strike Fighter, the Air Force's new bomber and refueling tanker are protected. The Pentagon also is seeking $1 billion for next-generation jet engine technology.
• The Air Force will jettison the entire A-10 fleet to save $3.5 billion over five years. "This was a tough decision," said Hagel. The Air Force will also retire the 50-year-old U-2 in favor of the unmanned Global Hawk. "This decision was a close call," he said, and reverses the Air Force's previous recommendation to retain the U-2 over the Global Hawk.
• The Air Force will slow the growth of its armed unmanned aircraft fleet. Instead of increasing to a force of 65 around-the-clock combat air patrols of Predator and Reaper aircraft, it will stop at 55.
• The Navy, for now, will maintain 11 carrier strike groups. A final decision on the future of the George Washington aircraft carrier will be put off until the 2016 budget submission. Hagel said keeping the George Washington in the fleet would cost $6 billion.
• Half of the Navy’s cruiser fleet  (11 ships) will be placed in reduced operating status while they are modernized.
• The Navy would buy two destroyers and two attack submarines per year, as well as one additional afloat staging base.
• The Littoral Combat Ship program will be truncated at 32, instead of the Navy's desired 52. "No new contract negotiations beyond 32 ships will go forward," said Hagel. He will ask the Navy to design a new small surface combatant that is consistent with the capabilities of a frigate.
• The Marine Corps will come down from 190,000 to 182,000 troops.
• The Army will have to accelerate the pace and increase the scale of its  drawdown. The Army had planned on reducing its current force of 520,000 active duty troops to 490,000. But will have to cut deeper, to between 440,000 to 450,000 soldiers.
• The Army will terminate the Ground Combat Vehicle program.
• The Army National Guard and Reserves will be reduced as well. Today, the Army National Guard numbers about 355,000 soldiers and the Reserves about 205,000. By 2017, the Guard would be down to 335,000 soldiers and the Reserves to 195,000.
• The budget recommends that the Army National Guard's Apache attack helicopters be transferred to active-duty units. The active Army will transfer Blackhawk helicopters to the National Guard. The Army will retire its Kiowa Warrior helicopters. The aviation fleet overall would decrease by about 25 percent.
• Major decisions on personnel costs – civilian and military – which make up about half of all defense spending, will be deferred pending the recommendations of an independent commission. Pay and benefits for service members since 2001 have risen about 40 percent more than growth in the private sector. No changes were recommended to military retirement benefits.
• The Pentagon is proposing a 1 percent raise in basic pay for military personnel in 2015, with the exception of general and flag officers, whose pay will be frozen for one year. Basic pay hikes beyond 2015 will be restrained, though raises will continue.
• Tax-free housing allowances – which currently cover 100 percent of housing expenses – will be slowed down until they cover an average of 95 percent of housing expenses with a 5 percent out-of-pocket contribution. The Pentagon will no longer reimburse for renter’s insurance.
• Over three years, Defense will reduce by $1 billion the annual direct subsidy provided to military commissaries, which now totals $1.4 billion. Commissaries will still get free rent and pay no taxes.
• The TRICARE health insurance program will see some changes, such as consolidating plans and adjusting deductibles and co-pays.

Topics: Defense Department, DOD Budget, DOD Leadership, Procurement, Defense Department