Thursday, March 14, 2013

3/14/13 RD Bulletin: Bulletin: Hill Budget Resolutions Unveiled: Senate Nicks DoD; House Gives It a Pass

News: The Congressional budget committees released their initial budget resolutions this week, despite the fact that the White House’s Fiscal Year 2014 request is not expected until April 8.  Separately, the Senate is on track to pass an omnibus appropriations measure that would provide the Pentagon with a full-year spending bill. 
Reports: The Center for a New American Security (CNAS) has published a new report, authored by U.S. Navy Capt. Henry Hendrix, which examines vulnerabilities in large American aircraft carriers.   
PDA Perspective: Five former deputy secretaries of defense have written Secretary of Defense Hagel urging him to initiate a comprehensive review of the U.S. defense posture.  It is the right time to do this, and Hagel should include in the process people, ideas and proposals from outside the Pentagon.

State of Play
Last week, the House of Representatives passed omnibus appropriations legislation that would provide the departments of defense and veterans affairs with full-year appropriations bills while allowing the rest of the federal government to fly on autopilot via another six-month Continuing Resolution.  The legislation, H.R. 933, adheres to the Budget Control Act’s pre-sequestration discretionary spending cap for Fiscal Year 2013 – before allowing the automatic cuts to take place as scheduled. 
This week, Senate appropriators unveiled their version of the House’s spending measure, which, in addition to providing the Pentagon with a full-year spending bill, also would include full-year appropriations for agriculture, commerce, science, and homeland security.  The Senate measure is being sponsored by the chair and ranking member of the Senate Appropriations Committee, Barbara Mikulski (D-MD) and Richard Shelby (R-AL), ostensibly giving the bill a bipartisan touch.  With respect to defense, the Senate bill would provide $2.3 billion to maintain seven cruisers and two dock landing ships that the Pentagon proposed terminating in its FY13 budget as well as $273 million for the TRICARE program “to account for congressional rejection of proposed fee increases.” 
The spending legislation also would pave the way for the Navy to sign a five-year $27 billion contract to purchase nine Virginia-class submarines, reports Inside Defense.  However, Chief of Naval Operations Admiral Jonathan Greenert expressed reservations about the quickened pace of Virginia-class procurement, proclaiming that, under sequestration, it will be “extremely difficult” for the service to procure two attack submarines while at the same time purchasing Ohio-class replacement vessels. 
Senate Democrats have abandoned plans to provide the Pentagon and other federal agencies with expanded reprogramming authority, which would allow them to apply sequestration cuts with greater latitude.  The Pentagon would still have the ability to transfer up to $4 billion between accounts, which has been standard practice for some time, though, last year, Senator John McCain vowed to oppose continued reprogramming requests until the Pentagon provides additional details about previous transfers.  It remains to be seen if McCain will uphold his commitment to blocking future reprogramming requests. 
According to CQ Roll Call, Senate Democrats are siding with the White House in its opposition to providing greater flexibility in how sequestration cuts are applied to the Pentagon.  Publically, the administration says that the magnitude of spending reductions is so great that providing flexibility is a moot point because the cuts will be devastating regardless of how they are applied.  Some analysts and reporters, however, believe that the President is still holding out hope for the possibility of a ‘grand bargain,’ in which the administration would support reforms to earned benefit programs like Medicare and a rewriting of the tax code in exchange for nullification of sequestration and an extension of the debt limit. 
The President is now conducting vigorous outreach to members of Congress in support of a grand fiscal bargain.  Still, Republicans remain solely focused on forcing the President to make cuts to entitlement programs, and seem less interested in tackling tax reform or undoing the automatic spending reductions.  The Republican leader in the Senate, Mitch McConnell, recently proclaimed, “Until we make our entitlement programs fit the demographics of our country, you can’t save America, you can’t save the healthcare system. There is no revenue solution, I would say to you.”  For his part, the President says that without additional revenue, and with only demands for cuts in earned benefit programs, “we’re probably not gonna be able to get a deal.” 
This week, a series of budget resolutions and alternative substitutes were unveiled by various factions within Congress.  Representative Paul Ryan (R-WI) unveiled the House Republican budget plan, which would achieve budget balance within ten years.  According to American University professor Gordon Adams, Ryan’s resolution would nullify the sequester of defense funds and allow the Pentagon’s budget to grow with inflation over the next ten years.  According to a statement, the resolution would authorize “approximately $500 billion more than will be available absent changes in the Budget Control Act.”  Separately, Senate Democrats led by Sen. Patty Murray (D-WA), unveiled their version of the budget resolution on Wednesday, which would nullify the defense sequester and replace it with $240 billion in targeted defense spending reductions over the next decade.  The ideological and fiscal differences between the two budget resolutions present such a great divide that it is difficult to see how the two chambers and political parties will be able to reconcile the differences in order to produce a concurrent budget resolution. 
The Congressional Progressive Caucus, led by co-chairs Keith Ellison (D-MN) and Raul Grijalva (D-AZ), unveiled an alternative substitute resolution that would draw almost $900 billion in savings from the Pentagon budget.  The alternative would also reduce funding for the war in Afghanistan, require an audit of the Defense Department, and reduce contractor personnel.  In a statement, the co-chairs noted that, “The reapportioned force structure would reduce expensive modernization requirements, especially for older or unnecessary platforms designed to fight an extinct Soviet army.” 
In a recent GAO report examining potential future domestic base closures, the watchdog agency found that the Pentagon did not accurately estimate the costs associated with carrying out the last BRAC round in 2005.  In fact, the Pentagon underestimated the costs of the 2005 BRAC round by 67 percent.  It had originally estimated that the closures and consolidations would cost only $21 billion.  Last year, the Obama administration proposed two additional rounds of BRAC, which were roundly rejected by Congress.  Pentagon officials now say that with sequestration taking hold, the need for additional base closures is even greater than it was last year.  The White House is expected to request another round of BRAC in its forthcoming budget request.  Meanwhile, Politico’s Kate Brannen reports that the Pentagon is eyeing base closures in Europe as a means of drumming up political support for new base closures at home. 
The Center for a New American Security (CNAS) has released a report detailing the liability of high-cost naval assets like aircraft carriers. The report, At What Cost a Carrier, authored by Navy Captain Henry Hendrix, focuses on the concept that the supercarrier represents an unsustainable cost in the face of China’s growing arsenal of anti-ship ballistic missiles.  Hendrix notes that it costs the United States $6.5 million a day to operate each carrier strike group.  As a result of its high cost and potential vulnerabilities, Hendrix recommends placing less emphasis on large carrier strike groups and instead relying increasingly on the use of unmanned combat aerial vehicles (UCAVs), the extension of missile inventories, and a greater use of submarines armed with land-attack cruise missiles. Hendrix also suggests the Navy abandon the problematic and expensive F-35C in favor of the F/A-18 Super Hornet.  
GAO recently took another look at the troubled F-35 program, which has seemingly taken a short-term turn for the better. The agency commended the program for managerial improvements including production and testing efficiencies. The long-term financial outlook of the program, however, remains concerning. Carlo Muñoz of The Hill writes, “From now until 2037, DOD is expected to invest just over $12 billion annually just to keep the program on pace.” Indeed the GAO report notes that “the program continues to incur financial risk from its plan to procure 289 aircraft for $57.8 billion before completing development flight testing.”  The Pentagon currently plans on increasing F-35 procurement from 29 aircraft in FY13 to 66 aircraft in FY15, however, it remains to be seen how sequestration will impact these planned procurement levels. 
In light of the GAO findings, top Pentagon officials have reiterated their support for the program.  The GAO analysis follows on the heels of a recently unclassified Director of Operational Test and Evaluation (DOT&E) memo raising concerns about F-35 performance training. Project on Government Oversight (POGO) analyst Winslow Wheeler has indexed the faults; most notable of which are software restrictions, aft visibility, and sustainment.
Project on Defense Alternatives Perspective
Last week, five former deputy secretaries of defense sent a letter to Chuck Hagel recommending that he “launch a new, comprehensive review of our defense posture and take responsibility for proposing a new defense posture to the President and Congress.”  With a Quadrennial Defense Review (QDR) due next year, one might assume that these men are talking about getting that QDR rolling now and perhaps getting it out on the early side.  But no, it turns out that they have strong negative views of the QDR, saying, “After three cycles, the QDR process has become cumbersome and captured by the interests of the services, defense agencies, and the many joint program offices of the Pentagon.”  They also think that due to the sequester’s disruption of Pentagon planning and budgeting Secretary Hagel needs the results of a new review in six months, making it urgent to start now.  They state that “the Secretary of Defense needs a fresh mechanism, such as the Bottom-Up Review, that closely links his office to senior military commanders.”
Apparently, given the limitations of the QDR, a new name is in order.  But, it is not clear how changing the name will keep the institutional interests of the array of participants (they name the service chiefs, military departments, combatant commanders, defense agencies, and the intelligence community) from ‘capturing’ the outcome of the review.   Getting to a new posture suitable for changed circumstance will be much more likely if Hagel includes in his review circle people, ideas, and proposals from less ‘interest-conflicted’ parties outside the military and intelligence establishments.
The deputy secretaries are particularly concerned that a new broadly consensual defense posture be realistically supported by “stable financial resource(s).” For too long, the department has planned in the absence of effective resource constraints – to the detriment of our nation’s finances and likely to the detriment of the armed forces as well.  Indeed the legislation mandating the Quadrennial Defense Review requires that it not consider budget restraints.  Although they don’t explicitly say so, that is one reason the deputy secretaries call for a different sort of review.
Back in 2010, the Project on Defense Alternatives and a task force of independent analysts advocated for a new defense posture that would set the U.S. military budget on a financially sustainable path over the long-term.  Recently, PDA further elaborated such a posture in Reasonable Defense.  We welcome the recognition by five former deputy secretaries that “lower budgets mean a reshaped defense posture.”  Secretary Hagel should not hesitate to get that project under way.
News and Commentary
Washington Post: Military rethinking leads to some hard choicesWalter Pincus
“The sequester may turn out to be a good thing, at least when it comes to some Pentagon programs. It is forcing the military services to make hard choices they have avoided even thinking about while the money freely flowed to the Defense Department.”  (3/13/13)
Salon: Don’t fall for Pentagon spinBen Freeman
“Every year for the last five years the Pentagon has doled out at least $360 billion to contractors. In fact, every year since the war in Afghanistan began contractors have received more than half of the Pentagon’s total budget. In other words, contractors have received more taxpayer money than the Department of Defense’s civilian employees and nearly 1.4 million active duty military personnel combined. All that money has really added up. So much so that Pentagon contractors are sitting on a backlog of contracts worth nearly as much as the entirety of Pentagon sequestration. In other words, even if contractors absorbed all of the Pentagon sequestration cuts, they’d still be on track to receive more than $300 billion a year in new contracts, which is more than double what any other country in the world spends on its military. Does any of this sound catastrophic?”  (3/12/13)
“Embrace the call for defense budget cuts in the same amount as called for by sequestration, but reject the meat-ax notion of applying reductions equally, across the board. There are more skillful ways ahead that will emerge in the wake of reduced resources -- perhaps a whole new way of war to be revealed… For the U.S. military, the lessons of recent experience suggest an ever greater awareness of the need to move from forces made of a few large and expensive things to a force comprised of many small, nimble, networked parts. The answers will reveal themselves. All they wait on is the ‘call for the question’ to be stimulated by the requirement for additional defense budget cuts.”  (3/11/13)
New York Times: Cuts Give Obama Path to Create Leaner MilitaryDavid Sanger, Thom Shanker
“‘Sequester is an ugly experience, but it could grow up to be a budget discipline swan,’ said Gordon Adams, a former senior budget official in the Clinton administration who is now at the Stimson Center, which studies defense issues. ‘It could provide the planning discipline the services and the building have been missing since 2001.’ The central challenge facing the Pentagon and the White House, Mr. Adams and several current senior officials said, is this: All the big, immediate budget benefits come from reducing the size of active-duty forces. By contrast, cutting new weapons systems and bases and reducing health care costs can save large amounts 5 to 10 years out, but it does little in the short term.”  (3/10/13)
“The reasons for the F-35’s relative immunity are a stark illustration of why it is so difficult to cut the country’s defense spending. Lockheed Martin has spread the work across 45 states — critics call it “political engineering” — which in turn has generated broad bipartisan support on Capitol Hill. Any reduction in the planned U.S. purchase risks antagonizing the eight other nations that have committed to buying the aircraft by increasing their per-plane costs. And senior military leaders warn that the stealthy, technologically sophisticated F-35 is essential to confront Iran, China and other potential adversaries that may employ advanced anti-aircraft defenses. The biggest barrier to cutting the F-35 program, however, is rooted in the way in which it was developed: The fighter jet is being mass-produced and placed in the hands of military aviators… while the aircraft remains a work in progress. Millions more lines of software code have to be written, vital parts need to be redesigned, and the plane has yet to complete 80 percent of its required flight tests. By the time all that is finished — in 2017, by the Pentagon’s estimates — it will be too late to pull the plug. The military will own 365 of them.”  (3/9/13)
“The challenge going forward lies in striking the right balance between engagement and independence -- doing just enough so that others know they can count on us if needed but not so much that those with a greater stake take advantage of our overweening ambition. By the way, that will be primarily a task of intelligence and diplomacy, not military strategy. And while the sequester is a pretty stupid way to trim defense spending (i.e., Panetta was right to call it a ‘goofy meataxe’), it might have a silver lining. If it accelerates the process of rethinking our overall grand strategy, then the net effect might be quite salutary.”  (3/8/13)
“If the Obama administration intends to transform U.S. nuclear forces, rather than simply make incremental reductions, the president has to grapple with this much darker legacy. The fact that the nuclear enterprise is exempted for now from sequestration suggests he has not done so. Indeed, the Obama administration's approach to nuclear disarmament has struck me as fundamentally backward. Consider the president's stated goal of reducing our reliance on nuclear weapons: That might feed the president's ego as a historical figure, but it inflates his role in the process. Moreover, it suggests further reductions would be unwise. If nuclear weapons play such an important role in our security right now, why would we choose to reduce it?”  (3/8/13)
ThinkProgress: Defense Spending Myths: Cutting Through the NoiseLawrence Korb, Lauren Linde
“In deciding on how best to deal with our deficit crisis, the prospect of cutting the defense budget has been a point of heated debate. As the federal government grapples with the effects of sequestration, the House passed a bill this week that will cushion the effects of the cuts for the Pentagon while leaving other agencies to bear their full brunt. There are a few highly misleading ideas that have cropped up in the defense spending debates that detract from a productive conversation.”  (3/8/13)
Foreign Policy: Round One Goes to the Budget HawksChristopher Preble
“It is way too early for budget hawks to declare victory. The neocons won't go down without a fight, and they will have other chances in the months ahead to ratchet the Pentagon's budget back up to unnecessary levels. Still, it is significant that the fiscal hawks prevailed this time around, and it provides hope to those who believe that the United States can be safe and secure even without breaking the bank.”  (3/7/13)
Wall Street Journal: Next Steps in Reducing Nuclear RisksGeorge Shultz, William Perry, Henry Kissinger, Sam Nunn
“During the Cold War, the leaders of the two superpowers sought to reduce the risk of nuclear war. What was possible among declared enemies is imperative in a world of increasing nuclear stockpiles in some nations, multiple nuclear military powers and growing diffusion of nuclear energy. A global effort is needed to reduce reliance on nuclear weapons, prevent their spread, and ultimately end them as a threat to the world. It will take leadership, creative approaches and thoughtful understanding of the perils of inaction. Near-term results would lay the foundation for transforming global security policies over the medium and long term.”  (3/5/13)
Center for a New American Security: At What Cost a Carrier? (3/11/13)
Congressional Research Service: Cybersecurity: Authoritative Reports and Resources (3/8/13)
Congressional Research Service: Afghanistan: Post-Taliban Governance, Security, and U.S. Policy (3/8/13)
Congressional Research Service: Major U.S. Arms Sales and Grants to Pakistan Since 2001 (3/7/13)
Center for a New American Security: Light Footprints: The Future of American Military Intervention (3/7/13)
Congressional Budget Office: Monthly Budget Review (3/7/13)