Whoever is sworn in as president in January, the new chief executive will have less than a year to make a deal with Congress or watch the military’s budget be automatically slashed by 10 percent.

The Budget Control Act caps federal spending through 2021 unless Congress either relaxes the strictures, as it has done most years since the law was passed in 2011, or repeals it outright.

“I think the [Budget Control Act] is probably the biggest challenge that the next administration faces and not just for defense because it’s for the non-defense side of the budget as well,” Todd Harrison, director of defense budget analysis at the Center for Strategic and International Studies told reporters on Tuesday morning. “Whoever the next administration is, they are likely going to want to exceed those caps.”

Todd Harrison, director of defense budget analysis at the Center for Strategic and International Studies.
Todd Harrison, director of defense budget analysis at the Center for Strategic and International Studies.

In a Hillary Clinton administration, Democrats have signaled they would lift the budget caps for both defense and non-defense spending. Under Donald Trump, the Republican platform supports freeing only defense spending from the artificial caps. Either administration would be hamstrung for nearly its entire first term by the BCA is Congress if unable to act.

“Whether it’s Clinton or Trump, quite frankly, it depends more on the makeup of Congress,” Harrison said. “All of the other defense-related issues – things about readiness, about our force posture, modernization bow wave – those all depend on what you do with the Budget Control Act, with the budget caps.”

Before and since the BCA took effect, Defense Department officials railed against automatic cuts prescribed by the BCA. The Pentagon and service leaders have said they cannot fulfill their duties under the national security strategy with those levels of funding.

Congress and the Defense Department have found workarounds, like using overseas contingency operations funding (OCO) to pad the base budget with about $25 billion per year. Most of the delta between the budget cap and the Pentagon’s overall annual budget is hidden in funding labeled for Afghanistan, Harrison said. The OCO “shell game” can come back to bite the Defense Department if in any given year Congress does not allow it wiggle room under the caps and continue the OCO account.

“If they can’t get Congress to raise the budget caps and they can’t continue to get this extra OCO funding year after year, then they’ve got a real problem,” he said. “If they don’t continue to get that, then you’ve got a problem. Then you’re actually getting cut down to the budget caps and they don’t have a plan for that yet.”

During the past five years of budget caps, the Defense Department has railed against topline cuts but felt relatively little pinch because each year Congress has released them from the caps and padded their base budget with untouchable war funding. The BCA, therefore, hasn’t “been a big deal” except for 2013 when sequestration was sprung on a Defense Department that “steadfastly refused” to prepare for the cuts, Harrison said.

The next administration will have to usher the Defense Department through a period of intense modernization across all services dubbed the “bow wave,” when bills for half a dozen or more procurement programs come due.

“It’s a big deal because the Defense Department routinely plans for programs and expenditures in future years that the current budget caps do not support.”

Just outside the budget caps and just beyond the five-year planning horizon, the Defense Department has stacked up some major modernization bills, Harrison said. Bills for major acquisition programs – the B-21, F-35, Ohio-class replacement, nuclear capability upgrades – will all come due between fiscal 2021 and 2023.

The Air Force will have the largest burden to bear. In that timeframe the bomber, the new T-X trainer aircraft, the KC-46A aerial refueling tanker, the Long-Range Standoff weapon (LRSO) air-launched nuclear cruise missile and the Ground Based Strategic Deterrent (GBSD) replacement for the Minuteman ICBM missile will all be in production. The service has also recently teased two new programs to replace the A-10 Thunderbolt, the OA-X and AX-2, which would represent billions of dollars in development and procurement.

Either Clinton or Trump will have to decide to either increase funding sufficient to cover those additional acquisition costs, increase acquisition funding but offset it with cuts to end strength or delay some of the programs, Harrison said.

“You start looking at all that and you scratch your head and say ‘Wow! What kind of budget are they expecting beyond FY 2021?’” Harrison said. “That is an issue this administration doesn’t have to deal with. … That’s something they are going to hand over to the next team.”