Monday, November 19, 2012

11/1/12 RD Bulletin: Obama Signals Support for Simpson Bowles Framework, U.S. Set to Hit Debt Limit Again


 
Highlights
 
Reports: The Unified Security Task Force has released its budget proposal for Fiscal Year 2013, which advocates reducing U.S. military spending by $1 trillion over the next decade, but in a much more gradual manner than sequestration. 
 
News: Should he win reelection, President Obama’s first order of business would be tackling the United States' debt and deficit problems.  While the President supports the framework of the Simpson Bowles plan, he believes the defense spending reductions included in it went too far.
 
News: The United States will surpass the current statutory debt limit sometime in the next few months according to the Treasury Department.
State of Play
 
In a series of interviews late last week, including one with MSNBC’s Michael Smerconish, President Barack Obama said that averting the automatic cuts to discretionary spending, known as sequestration, would be his first legislative “piece of business” should he win reelection to a second term.  When asked by Smerconish if the President would attempt to “resurrect” the Bowles Simpson deficit reduction plan (a proposal put together by the co-chairs of the National Commission on Fiscal Responsibility and Reform), Obama indicated his support for the broad outline of the plan.  But in describing why he rejected the Bowles Simpson plan when it was released in 2010, the President said he was concerned about the defense spending reductions advocated by the co-chairs: “we didn’t accept every one of the recommendations, because they, for example, wanted defense cuts that were steeper than I felt comfortable with as Commander-in-Chief… I don't regret declining to make the steep defense cuts that they were talking about.”  The Bowles Simpson plan would have constrained defense spending by implementing statutory spending caps on discretionary spending. 
 
With the President fully committed to negating sequestration, and Congress clamoring to undo the automatic cuts, many in Washington believe it’s only a matter of time until Congress amends the Budget Control Act to allay the spending reductions.  However, influential conservative activist Grover Norquist believes that sequestration is the only way that Congress and the White House can get a handle on Washington’s spending problem, telling Politico, “Sequestration is not the worst thing.  There are better ways to reduce government spending but Congress didn’t get there. … We’ve got to get away from this idea that, if the defense sequester got put off, or cut in half, or redirected, then somehow they’ve dodged a bullet and we don’t have to do anything on defense.”  Norquist further indicated that he will be forming a coalition with other conservative groups to oppose any nullification or delay in sequestration without commensurate cuts elsewhere in the federal budget. 
 
The Center for American Progress and Institute for Policy Studies have jointly released their annual report, Rebalancing Our National Security: The Benefits of Implementing a Unified Security Budget, which advocates reducing Pentagon spending by approximately $1 trillion over the next ten years.  The Task Force which compiled the report, including Project on Defense Alternatives co-director Carl Conetta, agree that defense spending reductions should be implemented in a more gradual manner than current law requires, but “argue that the amount of cuts to the Pentagon budget mandated by both parts of the [Budget Control Act] is readily achievable with no sacrifice to our security—if the cuts are done in a thoughtful manner over the next decade.”  The report recommends reducing procurement of the Virginia-class attack submarine, cancelling the V-22 Osprey program, eliminating two variants of the F-35, further drawing-down U.S. forces stationed in Europe, and reducing the U.S. nuclear arsenal to 311 weapons.  With the savings accrued from reducing the Pentagon budget, the report advocates investing $240 billion in domestic nation building activities, increasing international affairs spending by twenty percent, and contributing $200 billion to deficit reduction.  
 
The Treasury Department announced on Wednesday that it expects the United States to reach its current statutory debt limit by the end of the calendar year.  As was the case last year, the department says it can employ emergency measures to delay raising the debt limit until early next year.  The United States currently holds $16.16 trillion worth of debt, while the current limit stands at $16.39 trillion.  This adds another difficult and challenging item to the long list of issues that Congress must tackle either during the lame duck session or immediately next year. 
 
At a joint press conference with the Chairman of the Joint Chiefs of Staff, Defense Secretary Leon Panetta outlined four pressing priorities he would like Congress to tackle during the upcoming lame-duck session: Panetta wants Congress to nullify the pending sequestration cuts, pass the annual National Defense Authorization Act as well as a high-priority cybersecurity bill, and confirm two generals for posts atop NATO forces in Afghanistan and Europe.  In discussing his priorities for Congress, Panetta noted that forcing the Pentagon to operate under a six-month continuing resolution (instead of providing a full-year appropriations bill) is imperiling efforts by the services to craft budget requests for Fiscal Year 2014 – a process which is currently underway. 
 
Meanwhile, Politico reports that Congressional staff are conducting “technical prep work” on appropriations bills, including the defense spending bill, in the long-shot case that Congress decides to take up its annual appropriations bills during the lame-duck session. 
 
The Project on Government Oversight sent a letter to the chairs and ranking members of the armed services committees with policy recommendations for the annual defense authorization bill.  Amongst its recommendations, the letter requests that the committees freeze defense spending at last year’s enacted level, cancel one variant of the Littoral Combat Ship, eliminate unrequested funding for the M1 Abrams tank, and cancel two controversial nuclear weapons facilities. 
 
Although the Office of Management and Budget has yet to issue clear guidelines to federal agencies regarding how they should expect to implement sequestration, scant details continue to emerge from budget planners.  In an October 3 interview, the Pentagon’s acquisition chief, Frank Kendall, said that should sequestration occur, the department would move quickly to protect high-priority weapons systems as well as funding for combat operations in Afghanistan.  One way that the Pentagon is examining shoring up funding for high priority programs is furloughing hundreds of thousands of civilian defense workers.   Another way to protect high priority programs would be to submit reprogramming requests to Congress in order to shift funding from one account to another. 
 
The Stimson Center’s Gordon Adams predicts that the Pentagon would submit $15-20 billion in reprogramming requests if sequestration occurs, however earlier this year, Senate Armed Services Committee Ranking Member Sen. John McCain (R-AZ) said he would not continue to approve reprogramming requests until the Pentagon properly accounted for the past two years’ worth of funding transfers.  Whether McCain would commit to blocking reprogramming requests under a “doomsday scenario” remains to be seen. 
 
The Air Force is launching a $6.8 billion initiative to replace its aging fleet of HH-60 Pave Hawks, reports Defense News.  This marks the second time over the past decade that the service has attempted to replace its fleet of combat search and rescue helicopters, after GAO struck down the previous $15 billion contract in 2007.  The Air Force has issued a request for proposals from industry, expects the program to last 14 years, and will likely purchase 112 of the new aircraft.  Separately, the Navy is considering purchasing additional EA-18 Growlers, an electronic warfare jet, a move that would keep the F/A-18 production line open until at least 2017.  Keeping the production line hot would serve as a hedge against further delays, cost-overruns, or reductions in the F-35 Joint Strike Fighter program, whose procurement cost has more than doubled since the original cost estimate.  However, CQ Today’s Frank Oliveri notes that Congressional supporters of the F-35 may try to block additional procurement of the Boeing-manufactured F/A-18. 
 
As required by law, the White House recently released the topline appropriated amount for intelligence activities in Fiscal Year 2012.  The entire intelligence budget was $75.4 billion, a 4 percent or $2.5 billion dip from the previous fiscal year.  Included in this amount was $21.5 billion for military intelligence programs under the purview of the Pentagon (both in the base budget as well as the Overseas Contingency Operations (OCO) account).  For Fiscal Year 2013, the Obama administration has requested $71.8 billion for intelligence activities, roughly 5 percent less than was appropriated in FY12. 
 
This month, the special inspector generals for Iraq and Afghan reconstruction released two reports chastising the Army Corps of Engineers for failure of oversight.  The first report docks the Corps for failing to confirm receipt of $1 billion worth of fuel purchased with Iraqi funds – bringing the total amount of unaccounted funds in Iraq under the Army Corps’ purview to $7 billion.  The second report notes that the Army Corps freed DynCorp International from contractual obligations for shoddy construction work conducted at an Afghan Army base.  A third report calls into question whether Afghanistan has the resources to operate and maintain military facilities provided by NATO following the alliance’s redeployment in 2014.
 
 
News and Commentary
 
“The Kremlin's refusal to renew a U.S. program that has spent more than $10 billion since 1992 on security for Russia's nuclear and unconventional weapons has caused angst, hand-wringing and finger-pointing… It was probably inevitable that Russia one day would decide that, yeah, the world's ninth richest nation should pay the freight for protecting its own nuclear arsenal. ‘At some point Russia has to do for itself what other states do for themselves, which is provide security for the weapons and material they chose themselves to produce,’ said Sharon Weiner, an associate professor at American University and an expert on U.S. counter-proliferation programs. ‘Russia needs to step up to the plate.’”  (10/31/12)
 
“Today the U.S. is effectively bankrupt, but continues to write security checks which it cannot cover.  America accounts for almost half of the world’s military expenditures and provides defense guarantees to prosperous, populous allies throughout Asia and Europe.  Moreover, U.S. forces wander the globe attempting to create democracy and stability ex nihilo.  At the same time Washington props up unpopular dictatorships throughout the Persian Gulf and Central Asia.  This strategy is unsustainable.”  (10/29/12)
 
“On Friday, the government announced that the economy had grown at a 2 percent annual pace between July and September. That stunned many analysts, who were expecting much weaker growth. So what happened? The Pentagon happened. Government defense expenditures surged by 13 percent between July and August. You can see the breakdown at the Bureau of Economic Analysis site. The Pentagon spent significantly more on weapons, training, operations, and maintenance. (Ammunition purchases, for instance, doubled.) Had these expenditures not occurred last quarter, the U.S. economy would have grown at a mere 1.36 percent pace.”  (10/26/12)
 
“The Medium Extended Air Defense System (MEADS) is a case study of a weapon system that should be evaluated against cost overruns, delays and the lack of any real military benefit. Since the likelihood that MEADS will be completed and deployed is virtually zero, the value of additional funding is diminished to hoping for future benefits from designing a new radar system, and using it to deflect German and Italian demands for more U.S. spending on the entire system.”  (10/25/12)
 
From Rep. Mike Rogers, chairman of the House Committee on Intelligence: “In the 11 years since Sept. 11, 2001, DHS has grown into the third-largest department in the federal government. With more than 240,000 employees and an annual budget of $40 billion, it is the epitome of government bureaucracy. Although spending on security is essential, DHS‘ massive size has unintentionally caused it to become flat-footed and complacent.  Given our deteriorating fiscal situation, we must come to terms with the fact that endless spending is not the right solution to the evolving security challenges we face.”  (10/25/12)
 
Peter Mansoor writes, “Just because American military superiority did not lead to the desired outcomes in Iraq and Afghanistan does not mean that we should swing to the other extreme and believe that the expense of maintaining conventional dominance has not been worth the cost. American naval and air forces dominate the seas, skies, and space of the global commons, creating a stable environment for interstate commerce and international exchange. American land power has stabilized a number of regions, among them Europe and Northeast Asia, that for centuries were among the most volatile in the world. These manifest accomplishments were the result of astute diplomacy backed by American military superiority. The absence of major interstate war today is the result of American strength, not weakness.”  (10/24/12)
 
The Atlantic: General Failure
Via Tom Ricks, “Looking back on the troubled wars in Afghanistan and Iraq, many observers are content to lay blame on the Bush administration. But inept leadership by American generals was also responsible for the failure of those wars. A culture of mediocrity has taken hold within the Army’s leadership rank—if it is not uprooted, the country’s next war is unlikely to unfold any better than the last two.”  (11/12)
 
 
Reports
 
U.S. Navy: CNO’s Position Report: 2012 (10/30/12)
 
U.S. Army: 2012 Army Weapon Systems Handbook (10/26/12)
 
 
 
 
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