The Pentagon will unveil its fiscal year 2016 budget request on Monday and ask Congress to give about $35 billion more than the sequestration spending caps allow for defense spending–and a lot of things would have to go right to squeeze all that spending into the final budget.
Todd Harrison, senior fellow of defense budget studies at the Center for Strategic and Budgetary Assessments, met with reporters Friday morning to discuss his budget predictions, and he made clear that a grand bargain to eliminate sequestration and allow the president’s requested spending level was highly unlikely.
“The question becomes, how do you work out some sort of a deal to pay for it? I think that’s what actually constrains the deal and makes it a smaller deal, just a one year or a two year deal and not going all the way up to what the president’s requesting– $35 billion additional for defense, times two, you’re talking $70 billion if you do that on both sides of the budget,” he said. No one would favor “paying” for that spending increase by adding to the deficit. Democrats would want new revenue, Republicans would oppose that, and therefore the amount of common ground the two could agree on–though tactics like closing tax loopholes, deferring sequestration until later next decade, accounting gimmicks–would limit the size of the spending increases for the defense and domestic budgets.
Therefore, Congress is more likely to pass a one- or two-year deal that would increase defense and domestic spending by $5 billion to $10 billion each, Harrison said.
A congressional budget deal along those lines would then put the president’s budget request at $25 billion to $30 billion above the spending cap.
Next in the budgeting toolbox would be compensation reform. The Military Compensation and Retirement Modernization Commission released its findings on Thursday, with 15 recommendations totaling more than $12.5 billion in annual savings to the federal government–eventually. If enacted this year, the reforms would generate between $3.9 billion and $6.2 billion in savings for DoD in FY ’16.
That puts the gap between the request and the spending cap at $20 billion to $25 billion.
Harrison added that Congress could find $5 billion, maybe as much as $10 billion, in unobligated prior year funds to take away from programs and count as savings. Based on previous years, they could also probably shift $5 billion or $10 billion in base budget spending into the Overseas Contingency Operations account–which does not count toward the spending cap–without generating too much opposition from right-wing Republicans more interested in reducing federal spending than meeting the military’s needs.
So, best case scenario–$10 billion in sequestration relief from a short-term budget deal, $10 billion in unobligated funds, $10 billion shifted into OCO and $5 billion from compensation reform–and the Pentagon’s request could be fully funded.
The danger in this, Harrison said, is not just that DoD is planning to spend $35 billion more than the caps allow this year–it’s that the estimated budgets over the next five years actually increase, diverging them from the sequestration caps even more than previous president’s budget requests showed across the Future Years Defense Program.
“The bigger issue actually is not just that they might not get the full amount for FY ’16, but look what they’re planning for future years–they’re starting programs, they’re ramping up programs that I don’t think they’re going to be likely to be able to execute. That’s a real risk,” Harrison said.