The most likely outcome this year in congressional deliberations on the Obama administration’s federal budget request for fiscal year 2016 is to provide funding at levels agreed to under the Budget Control Act, which would mean the Defense Department would get far less money than it is requesting, Robert Hale, the department’s former financial chief said on Tuesday.
The budget cap for the Pentagon under the 2011 law is $499 billion, $35 billion less than DoD wants in FY ’16, which would mean some significant reductions to acquisition accounts, Hale said as part of a defense budget webinar hosted by Defense Daily. But, he said, even though DoD would get less money than it is requesting, a budget approved by Congress means that the spending cuts would not be across the board as would happen without an agreement, which would trigger sequestration and chop programs equally.
With congressional agreement at the budget cap levels, “at least the cuts are made in a considered fashion,” said Hale, who is currently a Fellow with Booz Allen Hamilton [BAH]. He doesn’t think that sequestration will be triggered, which happened in 2013 and was painful to DoD and the services.
Roger Zakheim, a former staffer on the House Armed Services Committee who is currently with law firm Covington & Burling’s public policy and government affairs group, agreed with Hale that the most likely budget scenario that will exit Congress this year is at the budget cap levels.
Zakheim said there is concern among some members of Congress that the defense spending at the cap levels would be undesirable but the Republican leadership in the House and Senate, and in the Appropriations, Budget and Finance Committees appears to favor sticking with the Budget Control Act levels.
Just as the House and Senate Republican leaders have “increased their view that the Budget Control Act” has been positive overall, the appropriations committees “have similarly changed their tune in recent months or weeks, [and] taken the view that our fundamental function is to keep the government funded and the path to get it funded is to threaten defense and non-defense discretionary equally and the only way to do that and get agreement is at sequester levels.”
If sequestration is triggered, the White House Office of Management and Budget would direct that funding be set at the budget cap levels but rather than prioritize where the cuts are made, spending would be cleaved uniformly.
Based on an April 2014 Department of Defense report, Hale said that even with congressional agreement on budget priorities at the cap levels, programs like the F-35 Joint Strike Fighter would see fewer aircraft procured, the Navy would likely see funds allocated for seven ships instead of nine, and there would be changes in smaller procurement accounts as well. If spending at the budget cap levels persists for several years, then the Army and Marine Corps will likely suffer force structure cuts, the Air Force would retire its fleet of KC-10 tankers, and the Navy would have to seek a legal change to allow it to maintain a fleet of 10 aircraft carriers.
Some relief to the budget caps would likely be found by Congress adding some additional funding to the request for war operations, known as the Overseas Contingency Operations account, which is not affected by the budget caps, and savings due to declining oil prices, Hale said.
Todd Harrison, a senior fellow for defense budget studies at the Center for Strategic and Budgetary Assessments, like his fellow panelists expects the budget deliberations to go down to the wire. The federal fiscal year begins on Oct. 1.
Harrison thinks Congress will likely agree to appropriate funding slightly higher than the budget caps but well below the administration’s request based on recent history. That said, increasing funding beyond the caps will be challenging, he said. Harrison doesn’t expect congressional appropriators to raise the budget caps unless the Senate and House agree on budget resolutions to lift the caps.
Hale also said that the potential for a mini-budget deal is more likely than sequestration being triggered but less likely than Congress agreeing to spend within the caps. Under the mini-deal, the caps for defense and non-defense discretionary spending would be raised somewhat but not to the level of the administration’s request.
Such a deal could be paid for through some combination of revenue and fee increases and possibly cuts to lower priority entitlements, Hale said.