Thursday, May 31, 2012

5/31/12 May RD Bulletin: White House Determines War Funds Will Be Subject to Sequester

State of Play
 
Legislative: The Senate Armed Services Committee (SASC) unanimously approved its version of the National Defense Authorization Act (NDAA), which would authorize $631.4 billion in discretionary funding for national security programs in FY13.  The bill’s topline authorization is just under the President’s FY13 budget request, is almost $4 billion beneath the amount authorized by the House of Representatives, and is about $4.1 billion above the defense cap implemented by the Budget Control Act (BCA).  Notably, the bill would block the administration’s proposal to downsize the Air National Guard and prevent the closure of the M1 Abrams tank production line.  The bill would also prevent the administration from closing additional domestic military installations and would cut the Pentagon’s civilian and contractor workforce by five percent over the next five years (similar to a recommendation included in PDA’s most recent report, Defense Sense.) 
 
The Senate NDAA also directs the Department of Defense to report back to Congress on the effects sequestration would have on the department, which it has so far neglected to budget for.  Meanwhile, Senate Majority Leader Harry Reid (D-NV) is sticking to his position that sequestration will not be nullified unless Congressional Republicans agree to some form of government revenue increase.  Chairman Carl Levin (D-MI) has requested that the Senate NDAA be brought to the Floor before the August Congressional recess; however Winslow Wheeler of the Project on Government Oversight predicts that Congress won’t be able to conference the measure until after the November election. 
 
The Majority Leaders of the Senate and House have released their legislative agendas for the month of June, neither of which mentions Floor consideration of the National Defense Authorization Act or defense appropriations bill.  The appropriations bills that the House is currently considering or will soon take up include: Military Construction and Veterans Affairs; Energy and Water; and Homeland Security.  The White House has indicated that it may recommend a Presidential veto for the Military Construction bill and has expressed strong concerns with the intelligence authorization bill on which the House is also working.  The number two Democrat on the House Armed Services Committee and ranking member of the Intelligence Committee, Rep. Silvestre Reyes (D-TX), lost his primary battle this week ending a 15-year Congressional career. 
 
Executive: Speaking for the first time at the American Enterprise Institute, Deputy Secretary of Defense Ashton Carter warned Congress not to meddle with the President’s defense budget request, which could result in a “hollowing” of the armed forces and noted that “every dollar spent on bold, unnecessary programs is a dollar we lose for necessary programs.”  Carter also said that sequestration of defense funds next year would create “absurdities” for the armed services and mentioned that the Fiscal Year 2014 defense budget request, which the services will begin drafting this summer, will attempt to identify and maintain certain “skill sets” within the defense industrial base. 
 
Meanwhile, Pentagon press secretary George Little noted last week that there is not much the Department can do to budget for scheduled sequestration cuts, saying “There's not a whole lot of planning, quite frankly, that we'd do because it's an across-the-board cut… We would have to obviously take steps to deal with the consequences of sequestration and for prospective reductions in resources and personnel. . . . We haven't started it yet.”  Although the Pentagon may not have begun formally planning for the automatic cuts, service leaders have warned that sequestration would force the Pentagon to cut fifty ships from its long-term shipbuilding plan and reduce the Army’s end strength by 100,000 troops.  The Pentagon has now determined, in consultation with the Office of Management and Budget (OMB), that war (OCO) funds will be subject to sequestration. 
 
Secretary Panetta has left on a 9-day trip to Asia to discuss the administration’s new Pacific-oriented defense strategy.  The Secretary will be meeting with officials from Malaysia, Singapore, the Philippines, India, Vietnam, and Brunei.  The Senate has confirmed three nominees for top positions at the Pentagon: Frank Kendall as undersecretary for acquisition, James Miller as undersecretary for policy, and Erin Conaton as undersecretary for Personnel and Readiness.  Miller replaced Center for a New American Security founder, Michèle Flournoy. 
 
The Wall Street Journal reports that a $275 million fleet of C-27A cargo planes that the United States purchased for Afghanistan has been grounded for the past three months due to safety issues resulting from poor maintenance.  This follows recent complaints by Afghan security forces over the quality of military supplies received from the United States.   Fox News reports that from 2010 to 2011, the United States spent more than $20 billion arming Afghan security and police forces. 
 
Project on Defense Alternatives Perspective: The Senate Armed Services Committee (SASC) has just avoided a chance to go on record in support of the budget caps that Congress put in place with enactment of the Budget Control Act (BCA) last August.  Then in February, the President sent his FY13 budget to Congress which turned out to exceed the BCA cap for defense by $4.1 billion.  Only a couple of weeks ago SASC chair Carl Levin declared his intention to “hold the line” on Pentagon spending and keep it within the BCA caps.  Apparently, he then received a stern call from the White House telling him not to challenge the President’s position in an election year. 
 
This week, all 26 members of the SASC voted to approve spending levels virtually identical to the Obama request.  This plays nicely into the hands of the Republican dominated House which has already authorized national security spending at about $8 billion above BCA caps.  Usual practice in Senate-House conference negotiations is to split the difference, which means the Pentagon’s budget may exceed BCA caps this year by around $6 billion before counting the gift they received when the White House proposed shifting roughly $4 billion in personnel funds from the base budget to the OCO (war) account, which is exempt from BCA caps.  None of this is helpful in preparing for the budget compromises that must be made in the fall and winter of this year when there will be irresistible pressure to amend the BCA.  Additional defense savings will be necessary and letting the Pentagon escape from what was already painfully decided just makes future cuts more difficult and costly to implement.
 
Highlights
 
PDA co-director Charles Knight argues that Congress will be unable to enact a fiscally responsible compromise to end sequestration without including additional defense reductions.  Knight highlights a recent set of recommendations co-authored by defense analysts at PDA and the Cato Institute, which outline how the United States could achieve up to $20 billion in national security savings this fiscal year.  The recommendations outlined are relatively modest in scope and could be implemented immediately without impacting the United States’ global posture or its national defense.  (5/30/12)
 
Although Congress has sworn off the use of earmarks, Winslow Wheeler believes the House has developed somewhat of a slush fund in the Operations and Maintenance account.  Wheeler, who helped procure federal funds for a number of member projects over his 30-year Congressional career, surmises that funding added to the O&M account above the President’s budget request will likely be utilized by members of congress to fund projects on military installations in lieu of earmarks.  (5/29/12)
 
Democratic Congressman Mike Honda lambasts House Republicans over their attempt to nullify sequestration of defense funds in favor of reductions to social and domestic spending programs and discusses a Congressional Progressive Caucus (CPC) effort to develop a new policy paper that will establish a progressive vision for defense, diplomacy, and international development budgeting.  “Keeping defense spending high is not the answer. We must understand that war hawks are trying to make the decision for us to increase military spending on costly and wasteful programs we most likely will not need at the expense of spending to preserve the environment, health care and education,” writes Honda.  (5/17/12)
 
Other News and Commentary
 
Austin Wright summarizes the main differences between the House and Senate versions of the NDAA, which the two chambers will have to reconcile in an eventual conference negotiation.  Notably, the two bills’ topline authorizations are roughly $4 billion apart, the Senate bill requires the Pentagon to cut its civilian and contractor workforce by five percent, while the House bill blocks the proposed retirement of the Global Hawk Block 30 drone and directs the Defense Department to begin planning for an East Coast-based missile defense shield.  (5/30/12)
 
Andrew Bacevich observes that while President Obama has cast himself as a “war-ender,” he has greatly expanded special operations capabilities.  Bacevich discusses Obama’s insulation of special forces from budget cuts as well as their increasing autonomy: Special Forces now “represents the ultimate manifestation of the abyss now separating the military and society... the American people have forfeited owner’s rights over their army.”  (5/29/12)
 
Douglas MacGregor, a retired Army Colonel, proposes eliminating the Joint Capabilities Integration and Development System, which helps the Pentagon identify and prioritize joint military acquisition.  McGregor calls for the establishment of a new program that is designed to reduce the numbers of flag officers and senior civilians, alter the force design, create a true operational joint force, reduce technology costs, and reduce the number of “overseas garrisons.” (5/29/12)
 
Appearing on the program This Week in Defense News¸ Gordon Adams predicts that next year’s sequestration cuts will be prevented, but that over the long-term, defense reductions in excess of $500 billion will occur, “What is likely is that the impact of this moving this agenda to the right each year on defense is that defense will go down significantly more than the 500 billion dollars that Secretary Panetta thinks he’s put out over ten years.”  (5/27/12)
 
Robert Haddick reports on a recent request from Central Command leader Gen. James Mattis to deploy an additional aircraft carrier strike group off the coast of Iran.  Haddick laments the fact that regional commanders typically rush to deploy aircraft carriers without considering less costly and aggressive tools to respond to geopolitical developments and points out that at “$15 billion a pop -- not including aircraft and escort vessels -- the new generation of aircraft carriers is simply too expensive to be an answer to all of the problems regional commanders will want them to solve.”  (5/25/12)
 
Justin Logan discusses comments Sen. John Kerry recently made criticizing former Gov. Mitt Romney for calling Russia the United States’ “number one geopolitical foe.”  Logan criticizes Romney’s comment and Kerry’s retort for missing the point that military size is relative: “Part of the reason our national security politics are pathological is that we focus disproportionately on debating which enemy is the biggest without stopping to ask how big the enemies are.”   (5/25/12)
 
Air Force Lt. Col. Dan Ward uses the Army’s RAH-66 Comanche helicopter as an example of the deep-rooted problems in U.S. defense acquisition.  The program, which was conceived in 1982 to fight the Soviet Union was terminated in 2004, “22 years and $6.9 billion” later with no functioning model ever produced.  While most analysts would consider this program a boondoggle, Deputy Undersecretary of the Army Thomas Hawley has referred to the Comanche as a good program, because it prompted the development of otherwise applicable technologies.  Ward doesn’t completely dispute this point, but suggests that the Pentagon should learn an important lesson in defense procurement: Piling money, capability requirements, and time into a program won’t necessarily make it work.  (5/25/12)
 
The Defense Logistics Agency has calculated that a Swiss-based contractor, Supreme Foodservice, which has been in charge of supplying almost all food supplies to U.S. troops in Afghanistan, has overcharged the federal government over $750 million since 2005. Despite this, the contractor has been “short-listed” for a $10 billion contract to continue to provide military food supplies. (5/24/12)
 
Using Syria as an example of the arbitrary nature of foreign military intervention in civil conflict, Thomas Barnett argues that "Moral outrage is a headline and nothing more, while the killing is either made faster or slower but never really 'prevented.'"  Barnett encourages NATO intervention in Syria so that the United States can take some credit for the inevitable fall of Syrian leader Bashar al-Assad.  (5/30/2012)
 
Reports
 
Congressional Research Service: U.S.-EU Cooperation Against Terrorism (May 21, 2012)
 
Information Security Oversight Office: 2011 Annual Report to the President (May, 2012)
 
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