Recently, BFAD Distinguished Fellow Gordon Adams spoke at the conference “Time to Reset Defense: Guidance for a More Effective and Affordable US Defense Posture”, hosted by the Project on Defense Alternatives and the Center for International Policy. The conference brought together experts to discuss practical options to reform America’s military into a more effective and efficient force.
For his remarks, Dr. Gordon Adams focused on the cyclical nature of the defense budget and the effects of sequestration. The speech highlighted the politics behind the defense budget and what it means for defense leaders to begin a serious effort at shaping the defense drawdown.
You can watch his remarks here
Recently, BFAD Distinguished Fellow Gordon Adams spoke at the conference “Time to Reset Defense: Guidance for a More Effective and Affordable US Defense Posture”, hosted by the Project on Defense Alternatives and the Center for International Policy. The conference brought together experts to discuss practical options to reform America’s military into a more effective and efficient force.
In a new Stimson Center Spotlight, BFAD Director Russell Rumbaugh looks at President Obama’s FY2014 budget request. Analyzing the proposal, Mr. Rumbaugh finds that the budget ignores the broader budget fight while not making any serious changes to the national security budgets.
“Since national security cannot help drive a deal, the defense and international affairs budgets are status quo budgets, avoiding changes that might be opposed by the executive agencies and so open another front in the budget battles.”
Mr. Rumbaugh goes on to discuss the rebalancing going on between the Department of Defense and the State Department. Over the past 3 years switching between Security/ Non-security, and Defense/ Non-Defense has created confusion for budget watchers and policy makers. In ignoring part of these budget battles (such as the sequester), but accepting the Defense / Non-Defense limits “The budget request acknowledges one part of the current law and ignores another”. The failure to solve the broader budget issues have been an excuse for lawmakers to avoid the difficult job of reforming the national security budgets.
Stimson Center Co-Founder and Distinguished Fellow Barry Blechman recently participated in a panel briefing Congressional staffers on the key priorities and recommendations for reducing nuclear risk for the United States. The event, hosted by the Arms Control Association (ACA), also featured Ellen Tauscher, former Undersecretary of State for Arms Control and International Security, and Daryl G. Kimball, the Executive Director of the ACA. During his remarks, Barry highlighted the need to reexamine the scope of the U.S. arsenal. His comments included insight on the way requirements are set:
[Our current arsenal] is based on [old] requirements for deterrence [which] have stayed the same….the question now is ‘does this make sense’?
Our New Defense Strategy for a New Era report, based on the proceedings of a group Barry chaired, took this question to heart and realigned nuclear spending according to the strategy. Indeed, the costs associated with the nuclear arsenal, which BFAD has previously shed light on, should be up for debate in budget discussions. Stay tuned for our continued analysis on the issue.
The international affairs budget has the same topline games we’ve seen for years now and remains at the mercy of the broader budget battles.
The base international affairs budget request is roughly flat to last year’s request. The only problem is the actual international affairs budget for FY13 was $4.5 billion less than the request. But f150 got $3 billion more in war funding in FY13 than the President requested. And although the budget documents say this year’s war funding is just a placeholder and not a real request, it shows State only getting $3.8 billion, or $4.5 billion less than requested last year and $7.5 billion less than it was appropriated. All of those moving pieces add up to a total request just shy of $3 billion less than appropriated for FY13.
Once again, the President’s request tries to shift funding into the base budget, though this time it also requests significantly lower war funding. Still with war funding only as a placeholder, a larger defense request may provide room for Congress to maintain most of the f150 funding even if some has to migrate into the war budgets.
The President’s budget—like the House and Senate budgets—ignores the implementation of sequester, assuming some deal this summer replaces it. But the budget still reflects the builddown we’re living in by implementing two decisions:
First, the President’s budget matches the pre-sequester caps contained in the amended Budget Control Act (BCA). That is different than last year’s budget, which assumed Congress would change the law to reflect a security/non-security divide; security being not just DoD but veterans, international affairs, homeland security and other spending and non-security everything else. This year it accepts the budget really will be decided on a defense/non-defense basis. And it accepts the cap level, which required trimming $36B over ten years from last year’s DoD request.* But it means we have this funny situation where the budget is acknowledging one part of statute but ignoring another—sequester—since the caps it matches don’t include the automatic reductions that are already the law of the land.
Second, the budget trims another $114B from DoD over ten years to help provide defense’s share of the offset the President has offered as part of his plan to replace sequester. Those cuts don’t start until FY17—three years from now—and in the President’s budget are expressed as lower statutory spending caps. But those cuts are real savings. Or as real as projected savings can be. The first cut of $36B isn’t real savings because its just a decrement from a request, which wasn’t approved in any way by Congress. The $114B cut is a cut from the current statutory caps and has the effect of actually decreasing deficit and debt projections.
Nobody needs telling anymore, but this budget is yet another step in the gradual decline that turns into a defense builddown in retrospect.
* These figures are calculated assuming DoD’s share of the 050 cap is 96%, DoD’s traditional share of 050. But that is an assumption not mandated by law.
… It's time to start asking tough questions about redundant staffs… There are dozens of offices of general counsel scattered throughout the Department. Each service has one. Every agency does, too. So do the Joint Chiefs… The same could be said of a variety of other functions, from public affairs to legislative affairs… Health care is another…
…DOD also has three exchange systems and a separate commissary system, all providing similar goods and services…
…It takes today twice as long as it did in 1975 to produce a new weapon system, at a time when new generations of technology are churned out every 18 to 24 months…
…No business I have known could survive under the policies we apply to our uniformed personnel. We encourage, and often force, servicemen and -women and retire after 20 years in service, after we've spent millions of dollars to train them and when, still in their 40s, they were at the peak of their talents and skills.
Now for the kicker: this is not an excerpt from Secretary Hagel’s address at NDU, though it easily could have been. Nor from the Defense Advisory Group that Stimson co-founder Barry Blechman chaired last year, or the Defense Business Board, or CBO’s Budget Options analysis, which has repeatedly said the same things. Donald Rumsfeld made these points – and not for the first time – in an address on September 10th, 2001.
The ideas are still worthy, and the evident difficulty in achieving them should not deter the Pentagon and Congress from trying. Indeed, there is some hope in one of Rumsfeld’s lines whose time has returned: “In this period of limited funds, we need every nickel, every good idea, every innovation, every effort to help modernize and transform the U.S. military.”
Last Thursday, President Obama met with the leaders of Sierra Leone, Senegal, Malawi, and Cape Verde to discuss each country’s “efforts to strengthen democratic institutions, protect and expand human rights and civil liberties, and increase economic opportunities for their people.” Before visiting the White House, however, the four African leaders met with Secretary of Defense Chuck Hagel at the Pentagon, where they discussed cooperation on both African- and U.S.-led security operations in the region. On Foreign Policy, Kevin Baron writes that this is another signal of the Pentagon’s increasing interest in Africa. The security concerns in the region include terrorism, drug and arms trafficking, and continuing instability in Mali and Somalia. U.S. defense officials are optimistic about the potential for building military-to-military relationships in the region.
I think on some level the relationships have gotten even better and stronger than they were previously, because you have a more open environment in which to have truly strategic discussions with these partners,” the official said. “Which is only a good thing. It can feel a little slower at first, I think. And I think it can look at little slower from the outside.
This optimistic view contrasts with that of BFAD’s Gordon Adams, who discussed the dangers of increased military engagement in Africa in January. Adams argued that the emphasis on security assistance shifts the focus away from governance, health, and development, and risks drawing the U.S. into Africa’s internal politics.
Africa can and should do better. And, lest we slide down that slippery slope to military commitments in fragile states, we should do better as well…The context for our engagement should be responsive and accountable governance, conflict prevention, conflict resolution, and development -- none of which is a core skill in the military, as well-intentioned as they may be.
Based on the defense official’s comments quoted above, these concerns do not appear to be part of the administration’s calculus at the moment. While it may be “[o]nly a good thing” right now, the Pentagon may be overlooking the longer-term consequences of this kind of engagement.
USS Harry Truman has become the mascot of sequester. The Truman was supposed to set sail as our second aircraft carrier in the Middle East but today it remains in Norfolk. The Navy – and the White House – explain that as a cost-cutting measure imposed by sequester. A number of watchdogs, our own Gordon Adams foremost among them, contest that characterization and instead suggest that it’s Goldwatching.
RADM John Kirby, the Navy’s principal spokesman, took to the pages of The Virginian-Pilot in response. It’s worth the lengthy excerpt:
Could money have been found somewhere, anywhere, to pay for the Truman's deployment? Maybe. But without the ability to transfer money from other accounts, there aren't many places from which we could have taken it without a greater cost to readiness elsewhere. And doing so obscures the real issue.
This was never about saving the cost of a single deployment. It was about managing risk across the joint force and about preserving our ability to keep a robust naval presence longer in that part of the world.
It was also more in keeping with the global force management plan, or "GFMAP" as we like to call it in Pentagon-speak. That's the plan that sets out the official requirement for military forces around the world. More importantly, it's the plan for which we are officially funded.
The GFMAP calls for a single carrier in the Middle East. But since December 2010, we have been trying to meet an additional request by U.S. Central Command for two.
Even before all this budget uncertainty, meeting that request was becoming increasingly difficult…
Get that? The Navy never favored having two carriers in the Gulf on a permanent basis. Change is the only constant when it comes to ship schedules, and the pretense of official long-term plans is perhaps overstated, but Kirby is clear about the Navy’s position: It wanted just one carrier on that station. Irrespective of how much discretion the Navy had in the Truman decision, from its perspective the result is a return to the status quo, not a reduction below it.
Chalk that up to being an important reminder that combatant commands like CENTCOM have wide discretion in setting requirements but that the resourcing of those requirements is always subject to negotiation with the Services. This is not a rigid formula.
Yet Kirby’s comments also point to a different storyline. The Truman has made a great political symbol, but the operational subtext may include elements of the Navy’s institutional interest. Surging a second carrier to the Middle East overrode its management plan, and taking that carrier back comes with the advantage of restoring that plan. This ‘cost’ sounds more like a ‘benefit’ from that viewpoint, a far cry from the claim that meat is getting axed.
There’s no way to know exactly how things came together to keep the Truman in Norfolk. But RADM Kirby told us a lot.
One of the harder parts of sequestration to understand is its impact on Army and Marine Corps personnel. President Obama clearly has exercised his statutory authority to exempt the Military Personnel title from sequestration, yet Army General Raymond Odierno and Marine General James Amos, chiefs of their respective services, have suggested that it will require them to reduce end strength.
Amos returned to the point in an exclusive interview with the Wall Street Journal.
I don't think there is any way my service is going to be allowed to [just]...go down to 182,000… Sequestration is going to drive us to a lower number.
But why is that? Salaries are exempt this year, and the services have the latitude in the coming years to propose alternative ways for fitting within the spending cap. The Journal pushes Amos into giving us a clue at the very end of the article:
Gen. Amos has been the military's strongest advocate of the advanced F-35 stealth jet. The Marines are planning to buy a version of the fighter capable of short take-offs and vertical landings, which has been plagued by cost over-runs and development problems.
"I don't have a choice," Gen. Amos said. "Absolutely, die in a ditch, we need this airplane."
That last sentence, of course, is a bit of a paradox. It’s been clear for a while that there’s a collision course between personnel compensation – what Defense Business Board member Arnold Punaro calls “GM-style fringe benefits” – and acquisition costs – pithily summed up by Augustine’s Law. Amos is feeling that very real friction and making a judgment about what has to give – but then he’s glossing over it by portraying his option as necessary, rather defending it as preferable.
In other words, this absolutely is a choice, just an especially hard one. Not only could this have gone another way, at other points in the Corps’ history it very well might have gone another way – namely, one less attached to particular hardware choices.
Amos remarked in the same article that, despite the pain, spending caps “will cause us to focus on what is really, really important and what is core to the institution… I think it is good for us." Those interested in the Marine Corps as an institution should stay tuned to see if Amos’ direction on what’s “good for” the service sticks for the duration of this build-down.
Major General Kenneth McKenzie, the USMC representative to the QDR, noted in a recent appearance on “This Week in Defense News” that a number of factors may converge to result in a more consequential QDR than previous years. These factors include a new Secretary of Defense, the strategic pivot to the Pacific, and above all, ongoing fiscal uncertainty.
There’s a famous saying from the interwar years, “We’re out of money, now we must think,” and we’re really at that phase right now. The forcing function of money is going to force us to think innovatively, and I think that may well exercise a powerful effect.
In January, MajGen McKenzie discussed the impact of budgetary factors on the QDR and the Marine Corps for an event hosted by BFAD. In both cases, he discussed how he sees the USMC’s role in the new strategic environment.
We think going forward, the Marine Corps can best contribute to the national strategy by being forward deployed, by being able to respond to crises this afternoon, not tomorrow, not next week, but being able to act immediately, and we think that’s the niche where we fit. Sort of a middle-weight force that is not going to need to be brought forward, that is going to be on the ground, or at sea, ready to act very quickly.
With Secretary Hagel confirmed, MajGen McKenzie said he expects the QDR process to formally begin in the near future. BFAD is excited to have been on the front end of this discussion, and we hope to continue to inform the conversation going forward.
Last fall Stimson collaborated with the American Academy of Diplomacy on Diplomacy in a Time of Scarcity, a report examining the challenges of the world today and the progress in preparing our foreign policy personnel for those challenges. Under Secretary Tara Sonenshine gave it a pithy bumper-sticker: “People matter in world affairs.”
Indeed they do. Today several of the report’s authors – retired Ambassadors Thomas Boyatt and Ronald, along with Stimson’s Russell Rumbaugh – emphasized that point in a commentary published on The Hill’s Congress Blog:
Even though they are a small part of the budget, the people who conduct U.S. diplomacy and development are the most important foreign policy asset.
Sequester’s across-the-board mechanics are insensitive to the priority the US ought to place on personnel, imposing a tight ceiling on the number of diplomats and forcing inappropriate reductions to training. Diplomacy in a Time of Scarcity offers a blueprint for directing cuts toward programs, which can be restored later, rather than personnel, which are part of the institution of foreign policy. In doing so, it provides Congress with a much better plan for 2014 and onward than the formulaic sequester the State Department currently is enduring.
Some of the best recent stories about Congress’ Power of the Purse have yet to be told. Irregularity in the budget process has spotlighted the parties’ leaders, who have been central negotiators for signature legislation like the Budget Control Act and American Taxpayer Relief Act, relative to appropriators, who still have been very influential in keeping the government open, and both have been hogging the stage from authorizers like the Armed Services Committees. Toes are bound to get stepped on.
And they have. In reference to an amendment he sponsored to strip out money House appropriators added for Marine facilities in Guam, Sen. John McCain (R-AZ) told John Bennett of Defense News that:
I think we won a symbolic vote yesterday. It was far more important than $140 million… What it showed was that there’s enough people — barely — to prevent the appropriators from overriding the authorizers.
McCain clearly was frustrated about the Guam cost in its own right, but he also dug into his process concern while introducing the amendment (see pp. 51-52):
…It is appalling and disgraceful that the authorizing language would be directly circumvented by the authorizers… What in the world is the job of the authorizers if it is not to have the language adhered to?
…It should be very clear by now that these expenditures pushed through in direct contravention of the bipartisan, bicameral decisions of the Armed Services Committee are a shameful waste of taxpayers' money. In my view, this is a clear example of political abuse of the appropriations process.
This is not a new position for McCain. Long-standing membership of the Armed Services Committee, including time as the ranking member, might have helped him arrive at this predisposition. But we also get to hear the other perspective since he raised this point during floor debate. Take a listen to Sen. Barbara Mikulski, the appropriations’ committee chair (see pp. 52-53):
…The Appropriations Subcommittee on Defense finished its work before the August recess. The authorizers didn't get it done until December 20... Remember, appropriations are supposed to be done before October 1… We want to respect the authorizers not only on defense but on every committee.
Tensions like these are virtually inevitable. Expecting one group of Congress members to “adhere” to the direction of another group sounds a bit ambitious, but the authorizing committees do exist for a reason. Likewise it is impossible to accommodate legislation if it doesn’t exist but also worth noting that Mikulski was defending the bill on the Senate floor on March 13th, well after December 20th, 2012.
That brings us to an important observation about the Power of the Purse: it belongs to “Congress,” not any one committee within it, and it’s exercised when the full chambers vote on spending and revenue bills. The process by which these bills get built deeply influences their content, but the chambers are their own enforcement authorities and floor vote is the process’ only essential part.
It was recently announced that Secretary Hagel has ordered the Pentagon to launch a review of current strategy prior to the upcoming Quadrennial Defense Review (QDR). The new review, led by Deputy Secretary Carter, is set to conclude by the end of May and assess DoD options in the face of the current defense drawdown.
[DoD spokesman] Little said that the review would look at the Pentagon’s strategy, force posture, investments and previous assumptions and practices. It is designed to look forward and define the major decisions that need to be made over the next decade to adapt to “a range of future budgetary scenarios.”
The review’s goal echoes Gordon Adams’ recent calls for a review US strategy in light of the current budget climate. However, as Gordon highlighted today, there are questions about the direction of the review:
This first look at the defense past and future could help [Hagel] set out strategic choices and management challenges as a way to guide the QDR. But it has to be budget constrained, and two things are unclear: First, is the secretary going to put resource limits on an equal footing with strategic choices, as is necessary; second, is he going to make this review a real plan with real guidance for the QDR.
Budgetary realities are inherently intertwined with assessing strategic capabilities for the future. This review will likely be a major factor in deciding the tone and direction of the upcoming QDR and, if it’s budget-informed as Gordon recommends, that could be a very positive contribution.
Earlier today, the American Enterprise Institute hosted a panel to discuss “Why this defense drawdown must be different for the Pentagon” featuring our own Gordon Adams. Despite the noise surrounding sequestration, Adams emphasized that the real danger lies in the department’s unsustainable cost growth in 3 areas: compensation and benefits, the back office, and acquisition programs. Rather than trying to do more with less, the department will need to set priorities so it can continue to respond to the most urgent threats even in a time of drawdown.
[T]here will be people who argue we have to keep everything up and we have to even spike in some of our capabilities because of the terrible world we face, and so we will have to do more but accept the fact that we will do less. That’s a recipe for hollowness. I don’t know a better recipe for hollowness than saying we’re going to do more with less…Or we can do less with less…You have to look across the board and say what it is that you want to do less [and] where the priorities are.
BFAD has extensively discussed how the U.S. can best shape its strategy and forces in response to a drawdown. Prioritizing the most important missions “would lead to a smaller and more focused military, with budget savings as a result,” as Adams and Matt Leatherman argued in a January 2011 article for Foreign Affairs. These priorities were identified in a November 2010 report by the Bipartisan Policy Center, “Restoring America’s Future,” to which BFAD contributed. This report emphasizes counterterrorism and cyber-security operations as the most critical missions, while also giving significant priority to deterrence and reassurance, sea patrol, humanitarian relief, and peacekeeping.
Though we've tripped merrily past March 1st and OMB has duly issued its sequestration order, its not yet clear defense (or any government spending--including international affairs) will be forced to live at sequester levels.
This week both chambers passed budget resolutions in committee, and both removed the cuts sequester imposed--on defense at least. The House budget waived sequester but keeps defense flat from FY13 (presuming the CR passes) and matches the caps in the BCA for the next nine years.* That means defense under the House plan would be held flat in real terms: no cuts, but no growth either. It also represents the first conscious nominal cut to defense by the Republican-controlled House, as the Chairman's mark acknowledges: "While this is significantly less than the levels in previous budget resolutions passed by the House, it is approximately $500 billion more than will be available absent changes in the Budget Control Act." In another sense, of course, such a cut seems pretty minor compared to Republicans not defending defense over the sequester as they were expected to.
The Senate budget resolution waives sequester too, but it grows defense year over year at about 1% less than inflation. So nominally defense still would be growing, but in real terms it would be going down. By doing so the Senate resolution saves $250B from defense over 10 years compared to the BCA caps, half the cut sequester requires achieved in a much more responsible way, but still a cut; if DoD took a fair share of that cut, it would put DoD's base budget about 10% below its FY10 peak.**
Overseas Contingency Funding
For war funding, the House resolution allocates $93B for FY14, or about $6B less than FY13 is likely to get but twice the President's placeholder from last year's budget, and $35B a year for FY15-23. Those allocations don't quite cap war funding: section 603 of the legislative language chastises the President for not submitting a budget yet and then gives the Chairman of the Budget Committee the authority to change the war funding depending on what the President says when he does submit a budget. So the House provides fairly unfettered flexibility for war funding, though not as free as the BCA.
The Senate resolution goes one better in handling war costs. It caps FY14 at $50B, slightly more than the President's placeholder from last year's budget, and FY15 at $25B, significantly less than the President's placeholder. It provides no specific allocation for FY16 on, presumably assuming a near complete exit from Afghanistan. But the resolution also includes a mechanism for providing more war funding if needed. It has a deficit neutral reserve fund for any additional war funding. That means war funding can grow to meet any operational need, but the additional spending must be offset--either through decreased spending elsewhere or more revenue. That’s not quite as strong as requiring a tax surcharge as I recently called for, but it’s still a real mechanism that acknowledges both the needed flexibility of war funding and also that our military operations should not bankrupt our nation.
International Affairs Funding
International affairs funding is also treated pretty differently by the two committees. The House cuts f150 12% from the presumed FY13 number in real terms, where the Senate increases f150 by 3%. That's the difference between a cut of $5B versus an increase of $1B in real terms. From there both resolutions grow international affairs at about inflation, or flat in real terms. Still, the difference in their first year means the Senate provides $70B more over ten years.
The two committees have produced very different resolutions, though the differences in national security are mainly in the details. Both waive sequester for defense but neither grows defense above inflation. The Senate provides less money for defense and more for international affairs. The House does the opposite. The remaining question though is will anybody actually cut a deal that waives sequester? Or are all these proposals already obsolete?
* That is, it matches the caps as long as there are caps--through FY21--and then grows it at the same rate in FY22 and FY23.
** Using CBO inflation assumptions, which are stingier than the President and DoD's tend to be. True for all real figures in this post.
Last year, then-Secretary of Defense Leon Panetta announced that the U.S. Navy would increase its forces in the Pacific to achieve a roughly 60/40 split between the Pacific and Atlantic oceans, respectively. In a new Stimson Center Spotlight, BFAD’s Matt Leatherman attempts to unpack that figure and measure the Navy’s progress towards this goal.
Such a crisp figure clearly symbolizes the firmness of U.S. commitments to allies like Japan and South Korea as well as to potential adversaries like China and North Korea. Still, questions persist about whether the details live up to their billing. Unpacking this statistic is one way to measure the pivot's progress, yet it also makes the message a bit more complicated. Indeed, the Pentagon may emphasize this ratio for its signaling power rather than as a precise statement of fact.
While the 60/40 goal represents the most tangible metric of the military rebalance to the Asia-Pacific region, it has several limitations that BFAD has discussed extensively. For one, the adjustment may be less significant than claimed, as more than half of the Navy’s major ships already have a Pacific homeport. Second, it is not clear which ships will change homeport in order to reach the 60 percent mark. Both of these issues point to the larger difficulty of trying to quantify the rebalance, especially given the U.S. Naval Fleet’s flexibility and global nature.
In August 2010, then Secretary of Defense Robert Gates announced a series of efficiency initiatives, one of which was the proposed reduction in the number of general and flag officer positions. In March 2011, Secretary Gates identified 102 G/FO positions to be eliminated, including 65 within two years. The goal of this initiative, Gates argued, was to combat the military’s increasing top-heaviness.
As a result of the wars, this department has taken on new missions and responsibilities that have required some of these new senior military and civilian billets. But apart from meeting these genuine war-related needs, we have also seen an acceleration of what Senator John Glenn more than 20 years ago called "brass creep," a situation where personnel of higher and higher rank are assigned to do things that could reasonably be handled by personnel of lower rank.
Unlike many of Gates’ efficiencies, this one is checkable – and in fact has been well checked by Ben Freeman at POGO. As of December 31, 2012, the number of general and flag officers had declined by 31, from 964 to 933. Fifty-eight percent of these have come at the one-star rank, which actually is below the ratio Gates planned (62 percent) but well above one-stars’ share of the G/FO population (47 percent). Conversely 42 percent of the cuts have come from the two-, three-, and four-star levels. Gates planned for them to only absorb 38 percent, well below their share of G/FOs (53 percent).
That leaves us with two conclusions. First, a roughly 50 percent success rate on the intermediate goal – 31 reductions out of the 65 planned to date – means the pace needs to pick up. Further, cutting one-stars disproportionately to their more senior officers is a questionable approach to addressing the department’s top-heaviness problem. Despite Gates’ efforts, “brass creep” persists.
The House has now passed its bill for FY13 appropriations. The House version includes an actual appropriations bill for Defense and VA/MILCON with a CR for all other bills and agencies. The Defense and VA/MILCON parts look pretty settled—all the tables in the explanatory statement say ‘Conference’ not ‘House’ and the press release boasts it “has been negotiated by the House and Senate”. There are several interesting aspects of the bill, but really the most interesting is how normal a bill it is. Most of this bill sets aside all of the brouhaha we’ve been living in for a year and half and worries only about adjusting the President’s request for FY13 to reflect Congressional preferences, what an appropriations bill does in any old year.
Still, we do live in this brouhaha and so its worth looking at this bill through that lens:
1. The bill does nothing to sequester. There is no blunting the effects or turning it off or changing how it is applied. Nothing. Chairman Rogers’ press release acknowledges that: “This funding is subject to sequestration, bringing the top-line overall rate of spending in the CR down to the sequestration level of approximately $982 billion.” The press release promptly obscures that by talking about the defense and VA/MILCON piece as if sequester will not happen, but that is just a rhetorical gimmick: the defense/VA refer to pre-sequester levels and the rest refers to post-sequester levels. Both true, but referring to different points in time.
2A. The bill meets the caps re-created by the New Year’s deal of security and non-security. CBO in their February update had said that the CR was $6.8B above the security cap. Now, CBO says it exactly meets the $684B cap. To get there the bill in its second to last section requires an across-the-board cut to security of 1/10th of a percent. 1/10th of a percent is not very much money; less than $0.8B in a $684.8B pot, and is done as a rescission only to non-war funding. Still, kind of ironically it uses a mechanism awfully similar to what would have been used to bring the bill back underneath the caps.
2B. DoD is getting about $529B when you add together the money it gets both from the defense part and the VA/MILCON part of the bill. That’s about $3B less than FY12, and about $800M more than the President’s request. The appropriators can claim to be flat with FY12 and more than the President because they consider the MILCON section separately, which does most of the cutting from the year before. That is still less resources the Pentagon is getting overall compared to last year.
2C. DoD likely did better under the broader security cap than it would have under the narrower 050, national defense only, cap. Although no one has provided an exact 050 number, 050 other than DoD has recently been about $24B. And in this bill its probably even more as NNSA got two of the anomalies in the extended CR, increasing nuclear weapons spending by about $350M and nonproliferation spending by $160M more than FY12. If we add that $24B to DoD’s $529B, 050 makes it to $553B and blows right past the $544B 050 cap.
2D. As we predicted, that increased DoD spending was paid for by cutting International Affairs. The President’s request had met the security cap at the time but cut DoD by $4B from FY12 to do so. This bill gets to the cap by cutting $4B from the President’s request for 150, International Affairs. (the cap was also $2B lower due to the New Year's deal, so DoD didn’t get all of the President’s request cut back).
3. Much of the description of this bill has been about how it gave DoD some relief, or softened the blow of sequester. But that is an overstatement. As we said up front, this bill doesn’t do anything to ameliorate sequester. What it does do is respond to the President’s request rather than just carry forward last year’s funding. And as we noted at the time, the President’s request made really big changes. Maybe most importantly it increased the readiness accounts even as it cut the topline, ensuring we don’t get a hollow force as has happened in past drawdowns. The Pentagon is at fault for confusing some of these issues, as our own Gordon Adams has noted. In their fight to stave off sequester they blurred what would be caused by sequester and what would be caused by operating under a CR. Readiness was their poster child because it had the biggest swing between the PB13 request and the effect of sequester, largely because it had the biggest swing between FY12 and the President's request. Now that the appropriators have updated their bill to the President's request, that swing is gone. The chart to the right illustrates that this bill is a traditional appropriations bill: it is different than last year but not that different from the President's request. Compared to FY12, the bill cuts funding from each title by an average of 3.2% (though O&M gets a 6.4% increase). Compared to the President’s request, it increases titles by an average of only 0.3% (O&M is actually cut, but by only 0.8%). This bill plays off the President’s request with adjustments for Congressional oversight and spells out the amounts to be spent on each program, with the same amount of execution flexibility that every defense bill provides.
In fact, in the part of the bill maybe most relevant to sequester, the explanatory statement picks up the language the Senate appropriators used last year to define what programs, projects, and activities are: down to the line item for procurement and RDT&E, and at the account level for O&M and MILPERS. That detail defines from what pot the percentage cut by sequester must be taken. In other words, in the part most relevant to sequester, the appropriators made sequester tougher not easier.
Now the fight moves to the Senate and Democrats attempt (maybe) to pass omnibus appropriations for the other government agencies and not just DoD (including State and the other international accounts), and possibly the President’s bid to waive sequester.
Thanks to Matt Leatherman for his help on this post.
House appropriators are out with their proposal for 2013 defense, military construction, and veterans’ affairs appropriations (with the rest of government riding along as a CR). They approved the President’s request to cut the Pentagon’s topline while still adding to the readiness accounts. Calling Operations and Maintenance “essential funding for key readiness programs,” they permitted it to grow by $10.4 billion above FY12 (total $173.5) and other accounts to shrink by the same: military pay (-$3.6B), research and development (-2.5B), and procurement (-4.2B) – again relative to FY12 levels.
The Pentagon in recent weeks has complained not just about sequestration but about the hit these readiness accounts were going to take because of the CR. Last week Gordon Adams explained this emphasis on O&M:
Planning was particularly critical for what is called the operations and maintenance, or O&M, account. The O&M budget -- which makes up over 40 percent of the Pentagon's total budget -- covers everything from the costs of sailing ships, to driving tanks, to flying planes, to maintaining bases, fixing equipment, training and educating the force, to, especially, the salaries of the 800,000 civilians who work for DOD. It is particularly vulnerable to sequester because other large Pentagon expenses will not be cut through sequestration. Military personnel and their benefits (including retirees) are exempt under the law, and dollars already obligated to contracts shield contractors from the near-term impact of sequester.
What's more, DOD had actually wanted to grow the O&M account, asking for a 6 percent increase when it submitted its FY 2013 budget request. And, adding insult to injury, during the first quarter of this fiscal year, the Pentagon actually spent its operations and maintenance funding at the higher rate it had requested -- not the FY 2012 level funded in the continuing resolution. "Silly us," [Secretary Panetta] said of that mistake. That's why March 27 represents a real reckoning point for the Pentagon.
If the House bill is passed and signed by the President, some of that problem goes away as O&M levels will be close to the requested levels. Of course, there’s still sequester, which would take 7.8 percent back off (see pdf pp. 8 & 26). In the House bill’s case, that would mean an O&M total of $160B, or $3B below FY12 (see pdf pg. 45).
Several weeks ago The Economist’s farewell to Secretary Clinton included an evaluation of Quadrennial Diplomacy and Development Review (QDDR) and especially the Bureau of Conflict and Stabilization Operations(CSO):
One of the review’s most important results has been the creation of the Bureau of Conflict and Stabilization Operations (CSO), a member of the new J family.
We agree. After the QDDR was published Laura Hall, then a fellow at Stimson, wrote that:
[The Coordinator for Stabilization and Reconstruction] will be turned into a bureau (Conflict and Stabilization Operations) that reports to an empowered Under Secretary for Civilian Security, Democracy, and Human Rights. While technically a demotion, the Coordinator has never really had the advantages of an “S/” office, so this clarity is welcome as is the co-location of operational capabilities such as INL and PRM.
In addition to that, Russell Rumbaugh and Alison Giffen recently advised the new administration on a few pragmatic steps it can take in institutionalizing CSO. One of the notable suggestions is to:
Continue to invest in the new CSO bureau and evolving CRC (Civilian Response Corps). CSO and CRC should be given appropriate resources and running room to refine their unique role as a US civilian capability with expeditionary reach and rapid response capabilities.
The QDDR doesn’t come up a lot these days. Not only is The Economist correct to highlight it as part of Secretary Clinton’s tenure, it’s also correct that CSO can meaningfully improve the State Department’s role of State Department.