BUDGET

Clinton vs. Trump: Implications for Defense

10/1/2016
By Jon Harper

Defense analysts expect that Hillary Clinton or Donald Trump would push for higher levels of defense spending if elected president, but it’s less clear which programs would benefit or suffer during their tenure in the Oval Office.

Both candidates have said they want to increase Pentagon funding beyond the amounts set by the Budget Control Act caps, which are slated to go back into effect in fiscal year 2018.

On her campaign website, Clinton called for “ending the sequester for both defense and non-defense spending in a balanced way.”

She would also prioritize “defense reform initiatives, curbing runaway cost growth in areas like health care and acquisition, and stretching every dollar.”

Trump has heavily criticized the Obama administration’s national security policies and described the current state of the military as a “disaster.”

“I’m going to make our military so big, so powerful, so strong that nobody — absolutely nobody is going to mess with us,” he said in a short video on his campaign website.

When it comes to topline spending, Michael O’Hanlon, co-director of the Center on 21st Century Security and Intelligence at the Brookings Institution, said there might not be much daylight between the Democratic and Republican nominees.

“Both would like to argue that they’re [planning on] improving the military,” he said at a recent conference, noting that he supports Clinton in this election cycle.

“I would expect either one of those two potential presidents to spend a bit more than we’re spending now [and] to advocate a military a bit larger and more expensive than the one President Obama favors.”

For fiscal year 2017, the Obama administration requested $524 billion for the Pentagon’s base budget, and an additional $59 billion for overseas contingency operations accounts, which are not included in the base budget or Defense Department budget projections. The five-year defense plan includes base budget spending of $557 billion in 2018, $565 billion in 2019, $570 billion in 2020 and $585 billion in 2021.

Those spending levels would exceed the Budget Control Act caps by about $113 billion over the course of the future years defense program, according to Todd Harrison, director of defense budget analysis at the Center for Strategic and International Studies.

“The BCA is probably the biggest challenge that the next administration faces, not just for defense, because it’s for the non-defense side of the budget as well,” he said during a recent meeting with reporters.

The future of military readiness, force posture and modernization “all depend on what you do with the Budget Control Act and the budget caps,” he added.
Roman Schweizer, a defense sector analyst at Cowen and Company, said funding the Pentagon at the maximum level allowed by the caps is a “worst case scenario.”

“Given the range of global threats, we do not believe a cut below the BCA defense numbers is politically feasible for any White House or Congress,” he wrote in a recent note to investors.

Schweizer is somewhat bullish about the outlook for defense contractors.

“We believe geopolitical turmoil will support increased global defense spending and provide growth for U.S. defense firms through increased DoD modernization and foreign military sales,” he said. “Under either Clinton or Trump, we expect U.S. defense spending to increase.”

In the coming years, Schweizer expects the Pentagon to receive less money than the toplines in the latest future years defense program, but more than the current law would allow under the Budget Control Act.

Neither the Clinton campaign press office nor the Trump campaign press office have responded to emails asking how much the candidates would seek to spend on the military if elected.

How individual programs would fare is also difficult to determine, analysts said.

“We are cautious about the outlook for some programs in a delayed FY18 budget due to the possibility of new White House priorities,” Schweizer said. “We have maintained a positive outlook on many major acquisition programs — F-35, B-21, KC-46A, [Ohio-class replacement] and others — despite their technology, manufacturing or budgetary challenges, but a new administration could seek to alter, delay or curtail some of these programs.”

During a recent speech at the Union League in Philadelphia, Trump proposed increasing the size of the Navy to 350 surface ships and submarines. But aside from modernizing cruisers and buying an unspecified number of destroyers with ballistic missile defense capabilities, he offered no other details about which types of ships he would want to procure.

That lack of specifics makes it difficult to estimate how much additional spending would be needed to achieve those goals, Harrison told National Defense.

“He said things like a 350-ship Navy. Well what kind of ships?” Harrison said. “An aircraft carrier — they’re $12 billion each. A littoral combat ship — they’re more like $600 million each. So it makes a big difference what kind of ships are in the 350-ship Navy and how quickly you try to get to that.”

In his speech, Trump said he would increase the size of the Air Force’s fighter inventory to 1,200 aircraft. The Air Force currently has more than 1,900 fighters in its total inventory (including the A-10), with approximately 1,140 designated for mission assignments. Trump did not say which fighter models he would favor purchasing.

On the personnel side, the businessman said he would boost the size of the active duty Army to 540,000 soldiers, and increase the number of Marine Corps battalions from 23 to 36.

It’s still unclear how committed Trump is to his latest force structure proposal, given his tendency to change his stance on various issues, Harrison said. Trump prides himself on being a “negotiator.”

“We’re just not sure what his real position is,” Harrison said. “It seems like he may be trying to moderate his position a bit to appeal to more traditional defense hawks within the Republican Party.”

In his Union League speech, Trump identified cyber and missile defense as priority areas for investment, but did not provide dollar amounts.

Given existing threats, Harrison expects that cyber and missile defense spending would grow regardless of who wins the election. But the allocation of funding for missile defense could differ significantly.

“You could see a shift in emphasis under Trump back towards more national missile defense systems,” Harrison said. “I would expect that a Clinton administration would probably continue the [Obama administration’s] emphasis on theater missile defense systems.”
Schweizer noted that programs related to the Pentagon’s third offset strategy — which seeks to leverage cutting-edge technologies to stay ahead of advanced adversaries — could fare well under a Clinton administration.

On her campaign website, the former secretary of state said she would invest in innovation and military capabilities that would enable the United States to counter “21st century threats.”

Personnel continuity at high levels of the Defense Department — which is much more likely under a Clinton administration — could help sustain the momentum of the offset initiative, Schweizer said.

“We could easily see Deputy Defense Secretary Bob Work — the chief catalyst for the offset — staying on for some period of time to manage the transition and keep him in a role to continue to press and protect” the effort, he said.

It isn’t clear how a Trump victory would impact the offset, he added.

As of press time, Clinton had not offered much detail about her plans for force posture or future weapon systems.

“I don’t expect that we’re going to get much more detail from either campaign, quite frankly, because at this point … it doesn’t look like that is what the election is going to really turn on,” Harrison said.

Regardless of who takes over the Oval Office, the president’s ability to pick winners and losers among military programs would be limited by Congress, noted Chris Higgins, a defense industry analyst at Morningstar.

Trump has been critical of the F-35 joint strike fighter program, which has suffered major schedule delays and cost overruns. But he would have difficulty killing it or severely curtailing it, Higgins said.

“Almost every state in the union is involved in this program,” he said in a recent Morningstar report. “A candidate like Trump comes out and makes statements against the F-35 program … but Congress is standing there saying, ‘Well, I have jobs in my district that are tied to this program.’ Setting aside whether it’s a good program or not, they have a vested interest in this, and that constrains any administration.”

Schweizer said lawmakers could rein in the mercurial Trump if he tried to implement a radical defense reform effort. “We would expect senior Republicans in Congress would prevent a Trump Pentagon from breaking too much glass.”

Budget gridlock could continue in the coming years regardless of who occupies the White House.

With Republicans expected to retain control of the House and Democrats in a position to retake
control of the Senate, both presidential candidates would likely face challenges in dealing with a divided or potentially hostile Congress, analysts noted.

“There’s a difference between what I think they would like to do and what they’re going to be able to do” if elected, said Christopher Preble, vice president for defense and foreign policy studies at the Cato Institute.

Republican and Democratic politicians have been at loggerheads over whether to increase non-military spending. If Trump wins, Democrats in the Senate would likely block efforts to increase military spending without proportional increases in non-defense spending. Clinton would similarly be constrained by lawmakers, analysts said.

“Politically I think Democrats are pretty wedded to the dollar for dollar increase in defense and non-defense,” Harrison said. “I would not expect Hillary to change that.”

If Republicans retain control of the House or have enough members in the Senate to filibuster, they would be in a position to thwart tax increases and more spending on domestic programs if Clinton wins, Preble said during a recent discussion with reporters.

Harrison said: “Unless one party sweeps in this election … you’re going to have to negotiate, you’re going to have to compromise to get a grand bargain budget deal. And I don’t think that’s likely to happen. The parties are still too far apart on these issues.”

Topics: Budget, Defense Department

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