Thursday, May 23, 2013

5/23/13 RD Bulletin: House GOP Looks to Bolster DoD Spending Despite Likelihood of Multi-year Sequestration

News: The House Committee on Appropriations’ spending outline, known as 302(b) allocations, has been released – showing that the committee intends on providing the Pentagon’s base budget with $512.5 billion in Fiscal Year 2014 funding.  The House version of the National Defense Authorization Act, currently undergoing subcommittee markup, would authorize $526.6 billion for the Pentagon’s base budget. 
Reports: Last month, the Federation of American Scientists released new analysis which asserts that the United States currently fields an excess number of ballistic missile submarines (SSBNs) evidenced by the fact that the number of SSBN deterrent patrols has declined significantly over the past thirteen years even though the number of submarines has dipped only slightly. 
PDA Perspective: With at least two years of sequester now likely, Secretary Hagel’s Strategic Choices and Management Review should, even if reluctantly, include a serious effort to carefully adjust defense planning to provide for robust national security within the constraints of current budget caps – without assuming those caps will be lifted anytime soon. 

State of Play
The House Armed Services subcommittees have begun formal consideration of the Fiscal Year 2014 National Defense Authorization Act (NDAA) with a series of markups this week.  Like President Barack Obama’s recent budget request, the NDAA as currently drafted would ignore sequestration spending reductions and authorize $526.6 billion for the Pentagon’s base budget in Fiscal Year 2014. 
Among the notable provisions considered so far: the seapower subcommittee approved a Navy request to increase the cost-cap on the USS Gerald Ford aircraft carrier by more than $1 billion (The Navy has now increased the cost-cap on its second Ford­-class carrier from $8.1 billion to $11.4 billion); required the service to report back on the viability of its long-term shipbuilding plan; required the Comptroller to assess the effectiveness of fixed-price incentive fee contracts; and rejected the administration’s request to retire early seven aging cruisers. 
The personnel subcommittee rejected proposals by the Pentagon to constrain the annual pay increase for troops; rebuffed attempts by the department to reform military health care programs; and required the elimination of twenty-four general and flag officer billets.  The draft NDAA text would require the Air Force to maintain its fleet of Global Hawk Block 30 drones; provide funds for C-130 cockpit modernization that the Pentagon has proposed forgoing this year; block the administration from implementing a new round of domestic base closures; and prohibit funding for the troubled Ground Combat Vehicle program until the Secretary of the Army reports back to Congress on the status of its acquisition strategy. 
The House Appropriations Committee has begun work on its annual spending bills – reporting out a Military Construction and Veterans Affairs spending measure that would provide a total of $73.3 billion in FY14.  This represents a $1.4 billion increase from last year’s enacted level and roughly $2.4 billion more than sequestration allows.  The committee decided to move this bill first because it is the least controversial of the twelve annual spending measures.  The committee has also reported out a Homeland Security funding measure that represents a slight decrease from last year’s enacted level.  Still, the homeland security spending bill is almost $1 billion above what sequestration allows.  
Meanwhile, House Republican appropriators are moving forward with a spending outline known as 302(b) allocations, which govern how much each subcommittee can spend on individual appropriations bills.  These 302(b) allocations are derived from the House Republican budget resolution authored by Representative Paul Ryan (R-WI).  Like Ryan’s budget resolution, the Appropriations Committee’s 302(b) allocations would allow for an increase in defense spending after sequestration is applied.  In order to pay for the increase in defense spending and still adhere to the post-sequester total discretionary spending cap, House Appropriators are proposing doubling-down on cuts to domestic programs. Still, both chambers of Congress must agree to the same 302(b) allocations, and due to Democratic control of the Senate, the contours of the House’s newly released spending outline are unlikely to advance very far.    
Under the newly released spending plan, the Pentagon’s base budget would receive $512.5 billion in Fiscal Year 2014 (not including military construction or family housing) plus an additional $85.8 billion in war funding.  This, despite the fact that the Pentagon has finally released a much-delayed war funding request for $79.4 billion.  The administration’s new war funding request includes more than $6 billion for weapons procurement.  
House Democrats, led by Representative Chris Van Hollen (D-MD), have introduced legislation, H.R. 2060, the Stop the Sequester Job Loss through 2014 Act, which would replace sequestration in Fiscal Years 2013 and 2014 with a mixture of revenue increases and discretionary spending cuts.  To replace the sequester with equal savings, the plan relies heavily on a proposal put forth by President Obama to reduce defense spending by $100 billion from 2017 through 2021.  Despite Van Hollen’s latest effort, journalists at POLITICO are skeptical that either political party will be able to nullify the automatic cuts anytime soon, writing, “Even though they both have spent months upon months saying they deplore it, neither Republicans nor Democrats seem poised to imminently pass any sequester fix.” 
According to Military Times, the Pentagon is near completion on a Congressional report that will show that Reserve-component troops are substantially cheaper to support than active-duty personnel.  Andrew Tilgman reports that “the Pentagon analysis concludes that Guard and Reserve troops not only are cheaper when in drilling status but also when fully mobilized, in part because their overall compensation is lower when taking into account noncash benefits such as retirement accrual and health care.” 
This report may provide ammunition to Reserve-component advocates in Congress, like Representative Mike Coffman (R-CO) who has advocated expanding the Reserve and Guard components as a means of saving personnel dollars.  Coffman has introduced legislation, H.R.804, the Smarter Than Sequester Defense Spending Reduction Act, which would save more than $50 billion over ten years by shifting Marine Corps and Army active-duty personnel into the Reserves.
Project on Defense Alternatives Perspective
It now appears likely that there will be at least two years of budget sequestration.  The Hill reports that another continuing resolution funding the government is likely this year, in part because of “surprise extra revenue that has come into government coffers from tax hikes and an improving economy. That means Congress won’t have to lift the debt ceiling — the likely vehicle for a grand bargain —until sometime around November.” Furthermore, “there is little expectation in the Senate that a sequester, part 2 can be avoided.”  Indeed, there’s a good chance that budgeting gridlock and the Budget Control Act’s (BCA) sequester will hold until there is a power shift in Washington following mid-term elections in 2014.  Of course, the current balance of power might hold after the elections and sequester could continue for four or six years, or even the full nine years stipulated by BCA.
When the FY13 sequester first went into effect, the Pentagon bet heavily on it being a short term bump in the road, soon to be reversed by the logic of it being ‘bad policy’ and it being something that few legislators supported.  Thus, they could talk themselves into not planning to live within sequester levels of funding and, rather, taking emergency measures such as furloughing workers and deferring maintenance.  Conveniently they could kick the costs down the road until better days arrived and their requested funding was restored after a few months.  Now the best bet is that ‘a few months’ will turn out to be at least two years.   With that prospect any notion of responsible planning requires that the Pentagon get busy planning the best military strategy and defense posture to fit within a budget of around $475 billion.
On May 31, the Pentagon will complete a Strategic Choices and Management Review.  As reported by Defense News, the review “will frame the choices DoD must make depending on the level of funding Congress appropriates.”  It will examine the effects on Pentagon planning and strategic objectives of funding levels (over ten years) $100 billion, $300 billion and $500 billion below previously planned levels.
It will be most interesting to see how the Pentagon review treats the $500 billion cut – the sequester-like option.  Had they done this review six months ago when they thought they could avoid lasting sequester cuts, they most likely would have dismissed that option as “entailing unacceptable levels of risk to national security.”  Now budget prospects make it harder to avoid bringing forward reasonable adjustments to their plans and posture which will provide for robust national security within the nation’s fiscal constraints.  After all, the task is not to live within the budgets of the late 1970s, but rather to live within the elevated budgets of the middle 2000s when George W. Bush was president.  It is a very doable task.  Is the Pentagon up to it?

News and Commentary
Orange Counter Register: Dump the F-35 boondoggleAndrew Castellano, Jon Rainwater
“The F-35 is the most expensive weapons system in history. The estimated cost for purchasing the fleet has jumped 70 percent since 2001. The projected $1.5 trillion long-term cost of maintaining and operating the fleet dwarfs the automatic spending cuts that Congress is struggling to undo. It's a lot to pay for a weapons system that works, never mind one that doesn't. The program has been plagued with problems, partly because contractors convinced the Pentagon to rush to production before test flights were done. Contractors claimed that this ‘concurrent development plan’ would drive down the cost per plane. Instead, it's turned into what Frank Kendall, the Pentagon's top weapons buyer, described as ‘acquisition malpractice.’ Earlier this year, the Pentagon grounded the entire fleet after an engine crack was found.”  (5/23/13)
“A funny thing happened on the way to a predicted disaster: The Pentagon is learning to live with the automatic budget cuts its leaders had warned would threaten national security if they took effect. The change from near-hysteria to sober assessment starts at the top with new Defense Secretary Chuck Hagel, a former maverick Republican senator from Nebraska who’s long pushed for serious restructuring of military spending. He replaced Leon Panetta in February.”  (5/22/13)
National Interest: Thinking About the Littoral Combat ShipJames Holmes
“The U.S. Navy’s new Littoral Combat Ship (LCS) is hotly debated. Proponents say it’s a vital building block of the future Navy. Opponents say it’s overpriced and overestimated. Tens of billions of dollars and the future of American sea-power are at stake. In reality, it’s too early to tell. The LCS is a great idea, but not all great ideas fulfill their promise. Some littoral combatant may be just what the navy needs. That doesn't mean the specific ship classes now plying the wine-dark sea are the answer. Maybe they are, maybe they aren't. The vessels must now deliver on the extravagant promises made for them. Neither backers nor detractors of the LCS, nor fencesitters like yours truly, can prophesy confidently about the outcome.”  (5/22/13)
“The U.S. Air Force plans to start operational use of Lockheed Martin Corp.-built F-35 fighter jets in mid-2016, a year earlier than planned, using a similar software package as the Marine Corps, two sources familiar with the plans said on Monday. The Air Force's decision to accelerate its introduction with a slightly less capable version of the F-35 software package means the planes will carry fewer weapons at first, although the software will later be upgraded to the final version, said the sources, who were not authorized to speak publicly.”  (5/20/13)
“Seemingly ignoring sequestration cuts, the president’s 2014 DoD budget proposal includes about $520 billion. This likely will not make it through Congress, and we will end up closer to $470 billion, or even lower, in the out years. We should be able to field a solid military for $450 billion to $500 billion a year, but we need to let military leaders fashion their cuts in a strategic fashion. Right now, we have tied their hands behind their backs. We are carrying infrastructure we do not need, and building and sustaining weapon systems the military chiefs have tried to divest.” (5/20/13)
“The current idea that the Pentagon needs more reprogramming authority via higher caps negates good governance and proper accountability. Here’s what Congress needs to do: First, stop all reprogrammings. Make program managers live within their estimates, forcing the Pentagon to prepare and manage programs better, lessening abuse. Second, change all appropriations from their one-, two-, three- and five-year obligational availability periods to single, indefinite appropriations — annually replenished “checkbooks” that Congress can easily track. That eliminates a lot of meaningless audits, paperwork and contentious rules about Anti-Deficiency Act violations. Improving the DoD’s acquisition process and outcomes means improving internal business processes. Reprogrammings cloak poor management.”  (5/20/13)
“Over the last decade, former Navy Secretary Richard J. Danzig, a prominent lawyer, presidential advisor and biowarfare consultant to the Pentagon and the Department of Homeland Security, has urged the government to counter what he called a major threat to national security. Terrorists, he warned, could easily engineer a devastating killer germ: a form of anthrax resistant to common antibiotics. U.S. intelligence agencies have never established that any nation or terrorist group has made such a weapon, and biodefense scientists say doing so would be very difficult. Nevertheless, Danzig has energetically promoted the threat — and prodded the government to stockpile a new type of drug to defend against it. Danzig did this while serving as a director of a biotech startup that won $334 million in federal contracts to supply just such a drug.”  (5/19/13)
“Two of the Army’s major rotorcraft procurement and modernization programs took major hits so the Pentagon could find $13.7 billion in savings over the next five years. Every Army aircraft procurement program lost funding going into fiscal year 2014, and none of those calculations factor in the possibility of sequestration that annually could remove another $40 billion to $50 billion from the Pentagon’s budget for a decade… The United States purchases more military rotorcraft than any other country and will remain atop the heap. But Army aviation could take a backseat to more pressing line items, once the immediate necessity of rotorcraft dissipates in tandem with the U.S. involvement in Afghanistan.”  (5/17/13)
Federation of American Scientists: Declining Deterrent Patrols Indicate Too Many SSBNs - Hans Kristensen
“The significant reduction in SSBN deterrent patrols over the past decade suggests that the U.S. Navy currently operates more SSBNs than are needed. Compared with a decade ago, each submarine is doing less of what it was designed to do – conducting deterrent patrol with ready nuclear weapons – and spending more time in port and on exercises. The declining deterrent patrols, combined with a decision to reduce the number of sea-launched ballistic missiles by a third over the next two decades without reduced targeting requirements, indicate that the current SSBN posture is bloated and in excess of national security needs. The navy could easily cut the SSBN fleet from 14 to 12 boats now and reduce the requirement for the next-generation SSBN from 12 to 10 boats and save billions of dollars in the process.”  (4/30/13)
Congressional Budget Office: Comparing Budget Plans (5/17/13)
Congressional Budget Office: An Analysis of the President’s 2014 Budget (5/17/13)