For Defense, a Tough Budget Balancing Act (UPDATED)

The House Armed Services Committee just completed its markup of the fiscal year 2015 defense authorization bill. Though consistent with the Budget Control Act caps, it moves dollars around — cutting operations, maintenance and military construction to offset administration cuts to pay and benefits. Next is action by the appropriators.

Committees are expected to take up the Defense Department’s budget in the July-September timeframe. Lawmakers face a difficult challenge as they deal with an administration budget request that is in excess of the BCA caps established for 2016 and beyond. The Pentagon is seeking $115 billion above the caps for 2016 through 2019 to meet defense needs. Military leaders agree the extra money is necessary to prevent the armed forces from becoming hollow.

The Defense Department and the military services must lay out spending and force sizing plans that can actually meet their mission requirements as laid out in national security documents. They also must satisfy the requirements of the regional and geographic combatant commanders.
 
The question is how and what do the services plan for in this era of budget uncertainty?

It is possible that the fiscal year 2016 and subsequent budget negotiations will be a repeat of 2013, when gridlock prevailed and sequester ensued, along with the resulting inefficient budget distribution. Will there be some relief as we saw in fiscal year 2014 and 2015?

There has been some discussion about the services preparing and submitting multiple budgets, based on different scenarios, including full sequester. There are several possible routes here, which is itself a problem. The proliferation of possibilities — and the impossibility of planning for all at once — creates real difficulties for the services. Do they hedge their bets against the hope for budget relief? Or plan for the reality of BCA and lower caps, thus forfeiting the possibility of advocating for and gaining somewhat higher budget authority?

The work to make it all fit ultimately falls, as it always does, to the services, which must execute and perform, no matter the final decision.

The choices require a careful balance among readiness, investment and force structure.

The Army is focusing on the present and war operations while trying to halt the slide of its force structure at no lower than 450,000 soldiers. Now moving from 575,000 to 490,000 soldiers, the Army could see that number fall to 420,000 under sequester. The Army’s planning is realistically accounting for the need to realign forces in the United States after 13 years of war, while also preparing for future threats and becoming an expeditionary force.

There are also significant requirements to sustain and modernize equipment. As a result, Army leaders believe they need three more years of overseas contingency operations funding. They are focused on the withdrawal from Afghanistan and bolstering their readiness for future missions. Future requirements for big-ticket items like the ground combat vehicle and a new aerial scout helicopter are on hold. Divestment of older vehicles in a transition to a smaller Army has drastically lowered average vehicle age. Lacking some budget relief, more trades between readiness and procurement will continue, with the likely outcome of further erosion in procurement. Near term emphasis for spending will be for increased lethality, improved network integration and upgrades to existing equipment.

The Air Force is focusing on the future and on big programs: a long-range bomber, the F-35 and a new tanker. And it is reducing duplication in overlapping capabilities. The Air Force thus seeks to retire the single-mission A-10 ground support aircraft, arguing that other multi-mission aircraft can perform this mission.

Congress doesn’t agree and is blocking the initiative. It also bans the Air Force from mothballing the U-2 spy plane. To pay for these adjustments, the Air Force is reducing manpower by 20,000.

The Navy is focused on both the present and the future. War fighting is a priority, as is modernization. The Navy seeks to maintain stable ship production and acquire new systems like the F-35 and a carrier-based unmanned aircraft. New thoughts about blue water operations have prompted the decision to truncate the littoral combat ship buy from 52 to 32 ships. A major decision awaits on the refueling of the George Washington aircraft carrier. Defueling is funded, but refueling is not. A reduction of carrier battle groups to 10 is a real possibility, though Congress opposes this.

Marines have been working on their readiness and expeditionary posture for some time. The postponement of the new amphibious combat vehicle puts them in the same category as the Army, which is sacrificing new capability to protect readiness and other essential programs. They are the self-advertised 911 force, unlikely to sacrifice fast-response and expeditionary capability. The new amphibious fighting vehicle is still in the future.

Defense Secretary Chuck Hagel said these Congressional decisions would force the Pentagon to offset foregone personnel and base closure savings by making cuts in other areas of the budget. They also create additional future costs for the Pentagon even as it faces deeper spending cuts in 2016. Congress has “proven unwilling to accept necessary reforms to curb growth in compensation costs and eliminate excess infrastructure and unneeded facilities,” said Hagel.

Amid this uncertainty, the services are doing their best within existing budget envelopes. In the past, extra money — and overseas operations budgets not subject to sequester — have cushioned this debate, but the ability to cover deficits without major tradeoffs is now over. Current budgets will of necessity force severe trades between readiness, investment and force structure.

Analysts will point out that the current downturn in defense budget authority is still $100 billion above previous budget lows. However, personnel costs are now much higher than before, so these increased bottoms are not able to cover necessary personnel, readiness and modernization costs.

It is conceivable that the administration and Congress will agree to a compromise that increases budget authority. Or Congress might allow the services to make the adjustments they deem necessary. Either way, the services will in the end make the best adjustment possible to build forces with readiness first, investment second and force structure probably a close third (as they are now in the process of doing). They are responsible for battlefield effectiveness and, after all constraints are fixed, will be the ones determining the ultimate configuration and quality of the nation’s combat forces.

Topics: Defense Department, DOD Budget, DOD Policy