Thursday, May 9, 2013

5/9/13 RD Bulletin: SASC Leaders Call on Hagel to Outline Sequester Cuts

 
Highlights
 
News: The chair and ranking member of the Senate Armed Services Committee have called on Secretary Hagel to identify $52 billion in potential Fiscal Year 2014 spending reductions by July 1. 
 
News: The Littoral Combat Ship program suffered another blow this week as a leaked Navy report casts doubt on both the cost and capabilities of the program. 
 
PDA Perspective: Until the mandatory sequester of discretionary funding is amended or repealed the administration and Pentagon have an obligation to plan for well-provisioned and trained armed forces appropriate to the level of funding available.  They currently are not doing so.
 

State of Play
 
The White House was roundly criticized last month when it released a Fiscal Year 2014 budget request that did not reflect or incorporate sequestration reductions to spending.  Now, the chairman and ranking member of the Senate Armed Services Committee, Senators Carl Levin (D-MI) and James Inhofe (R-OK), have requested that Secretary of Defense Chuck Hagel itemize $52 billion in military spending cuts from the department’s FY14 budget request by July 1.  The chair and ranking member wrote that “the identification of these specific reductions will serve both to help Congress and the Department prepare for the possibility that we will be unable to avoid another round of sequestration.” 
 
In their letter, Levin and Inhofe acknowledge that some members of Congress think that sequestration is an effective means of culling federal spending, and that prospects for a ‘grand bargain’ remain dim.  In a related statement, Levin again reiterated that he would prefer that sequestration be replaced with a ‘balanced deficit reduction package,’ which, Levin has suggested, could include an annual cut of $10 billion to the Pentagon. 
 
Pentagon officials admitted this week that they have recalculated sequestration cuts in light of the recently enacted omnibus spending bill, and found that the Department of Defense faces $4 billion less in cuts than originally thought.  In an interview with Defense News, Pentagon Comptroller Robert Hale pointed to a little-known provision in the 1985 Balanced Budget and Emergency Deficit Control Act (the 2011 Budget Control Act’s underlying statute), which states that if certain accounts decrease over the course of a fiscal year more than sequestration requires, then that account can be spared additional cuts.  As a result, the Pentagon and Office of Management and Budget are currently enacting $37 billion in military spending reductions, rather than $42 billion, and have until the end of this fiscal year to implement them. 
 
To help blunt the impact of sequestration on operations and maintenance accounts, the Pentagon is preparing to submit to Congress a multi-billion reprogramming request that would shift funding from procurement accounts to O&M.  The reprogramming request is also necessary due to unforeseen costs associated with the redeployment of U.S. troops and assets from Afghanistan –expected to cost around $7 billion.   Among the procurement programs slated to have funding redirected to O&M are the Apache helicopter, F-15, C-130, tracked vehicle programs, and drone systems. 
 
For several years now, the Pentagon has shifted funding from its base budget into the war funding account in order to help shoulder the cost of war fighting personnel and equipment.  Because war funding is considered ‘emergency spending’ and is not constrained by the Budget Control Act’s statutory spending caps, it is a tempting place for the Pentagon to squirrel away funding for high-priority items. 
 
With the wars in Iraq and Afghanistan drawing to a close, it had been expected that the White House would begin migrating funds back into the base budget while eventually ceasing to request OCO funding from Congress.  However, due to budget uncertainty, Comptroller Robert Hale announced this week that the Pentagon will attempt to maintain items like armored fighting vehicles, drones, and Army personnel in the war budget account. According to Defense News, upon entering office President Barack Obama pledged to enact “strict guidelines” on OCO funding requests. American University professor Gordon Adams points out that those restrictions “have gotten looser every year as the Pentagon’s banged away at trying to use the OCO request to make up for shortfalls in the base.” 
 
In a report issued last year, analysts at the Cato Institute and Project on Defense Alternatives chastised the Pentagon for including personnel funding in its OCO account and recommended that Congress work to halt the migration of base funding into the OCO account.  Meanwhile, the Pentagon says its delayed war funding request for Fiscal Year 2014 will be delivered in coming weeks.  The White House has been using a placeholder figure in lieu of its FY14 request. 
 
Bloomberg reports that a confidential analysis prepared for the Navy last year by Rear Admiral Samuel Perez warned that the $37 billion Littoral Combat Ship (LCS) program will be unable to meet its mission objectives. Though the Navy claims that the LCS is “under budget,” costs have doubled from $220 to $440 million per ship. The Navy has requested an additional $2 billion to buy four more ships in FY14 while continuing to split production between Lockheed-Martin and Austal, a decision the confidential report notes complicates logistics and maintenance. Perhaps most significantly, the report highlights the limited combat capability of the ship, calling it “ill-suited for combat operations” against any but the smallest, most lightly-armed ships.
 
Adding to an already bad week for the LCS, a draft GAO analysis has been released suggesting cost projections to operate and maintain the new class of vessel have been significantly underestimated.
 
In addition to concerns about the LCS, the Navy has run into a number of shipbuilding problems. Notably, the launch date of the first Ford-class aircraft carrier has been pushed back four months as the vessel clocks $2.5 billion in cost overruns. The service is also $300 million short on a multi-year contract to purchase ten DDG-51 Arleigh Burke destroyers, and is trying to bring down the per-unit cost estimate for the Ohio-class replacement submarine from the current $5.6 billion estimate down to $4.9 billion.
 
 
Project on Defense Alternatives Perspective
 
Last February, a month before sequestration went into effect, the Project on Defense Alternatives noted that “the Pentagon is ‘preparing’ for this eventuality in ways that are fundamentally unsustainable ... planning furloughs, suspending nonessential travel, imposing hiring freezes, reducing depot maintenance activity, cutting base operating budgets, and the like. What the Pentagon is not doing is making significant adjustments to their force posture which could maintain strong security at lower levels of spending.” In order to escape a budgetary squeeze play, PDA recommended that President Obama “break out … by announcing some Pentagon posture changes and budget cuts for FY14.”
 
The President did not take this advice and instead built his FY14 budget submission off of previous budgets and plans, ignoring post-sequester budget levels as if they are not current law.  In effect he has acquiesced to the Pentagon’s budget game, allowing them to orchestrate a growing perception of a ‘hollowing’ of the forces.  In a recent interview Pentagon Comptroller Robert Hale said, “If [the sequester] stays in effect, we’re going to have to make, and have made in many cases, major changes that are devastating, frankly, to our readiness.” 
 
It is easy to see how that narrative, echoed by a political chorus, will quickly build pressure for reversing the downward trajectory of Pentagon spending.
 
Nonetheless, sequestration is now the law of the land.  Until that law is changed the White House and Pentagon have an obligation to plan for that level of funding.  They should be reducing the size, scope of missions, and routine (non-war) deployment tempo of the armed forces.  Instead they insist on keeping forces large, the missions broad and deep, and routine global activities frenetic.
 
Responses to sequestered funding such as deferred training and furloughing of workers are clear signs of an unsustainable course.  Everyone in the defense establishment understands that.  It is bound to sap morale and over the course of time will harm the capacity to respond to a security crisis if and when it occurs.   A smaller, sustainable defense establishment is the much preferred and more responsible option.
 
It is fair enough for leaders of Congress, the White House, and the Pentagon to hate the sequester, but their refusal to make adjustments to pre-sequester plans is beginning to damage the armed forces.  They certainly cannot be excused for pretending they have a bigger budget to work with than they actually have.  It is well past the time for the Pentagon to make responsible adjustments in accord with their new budget reality.
 
News and Commentary
 
National Interest: Rational and Reckless Alliances – Ted Galen Carpenter
“As a new Cato Institute infographic and video demonstrate, allied free riding has grown even worse in the past few years. Today, the United States spends nearly 5 percent of its GDP on the military. The rest of NATO spends a paltry 1.3 percent, South Korea 2.6 percent, and Japan still just 1 percent. And the trend in the major European powers, even such countries as France and Britain that once made respectable outlays (in the area of 3 to 4 percent), is toward stagnation, at best. But as much as U.S. officials, members of Congress, and various pundits might complain, such behavior is predictable and rational. Washington has insisted on being the ‘indispensable nation,’ actually encouraging dependence on the part of other nations to preserve the U.S. leadership role in both Europe and East Asia.”  (5/9/13)
 
“In 2002, the U.S. military had just two kinds of camouflage uniforms. One was green, for the woods. The other was brown, for the desert. Then things got strange. Today, there is one camouflage pattern just for Marines in the desert. There is another just for Navy personnel in the desert. The Army has its own ‘universal’ camouflage pattern, which is designed to work anywhere. It also has another one just for Afghanistan, where the first one doesn’t work. Even the Air Force has its own unique camouflage, used in a new Airman Battle Uniform. But it has flaws. So in Afghanistan, airmen are told not to wear it in battle. In just 11 years, two kinds of camouflage have turned into 10. And a simple aspect of the U.S. government has emerged as a complicated and expensive case study in federal duplication.”  (5/8/13)
 
National Interest: Lessons from the Past for Syria Hawks – Lawrence Korb
“The last thing this country needs is to rush headlong into another disastrous war like Vietnam or Iraq, especially when the evidence is murky and the threat to our security doubtful. Even limited military intervention carries a host of risks and second-order effects, which proponents of action have spared little time to consider. Attacking Syria would represent a war of choice, not necessity, and should only be considered after extensive strategic calculation and with the involvement of the entire Congress, as the representatives of the people, our allies, and the United Nations. We certainly have not yet undertaken either of those preliminary steps in their entirety.”  (5/8/13)
 
“The Air Force stripped an unprecedented 17 officers of their authority to control — and, if necessary, launch — nuclear missiles after a string of unpublicized failings, including a remarkably dim review of their unit’s launch skills. The group’s deputy commander said it is suffering ‘rot’ within its ranks. ‘We are, in fact, in a crisis right now…’ The tip-off to trouble was a March inspection of the 91st Missile Wing at Minot Air Force Base, N.D., which earned the equivalent of a ‘D’ grade when tested on its mastery of Minuteman III missile launch operations.”  (5/8/13)
 
“After a decade of war and being aware that the size of the Marine Corps would be reduced from surge-level highs, the USMC Force Structure Review Group identified that the operational ‘sweet spot’ for the Corps of the future is somewhere between traditional army units and special operations teams. Institutionally committing to this sweet spot and focusing on smaller unit operations provide opportunities for the Marine Corps to deal with the fiscal pressure facing the entire DOD.”  (5/7/13)
 
“Pentagon contractors have privately wondered what, if anything, the industry should be doing to change the perception that sequester is a fake crisis. They concede that earlier lobbying efforts flamed out, partly because they overstated the impact of the cuts. The industry has to repair a credibility gap with Congress and begin to better communicate the effects of sequester, one official said during an off-the-record industry gathering. Excessive sequester hype in the months leading up to the March 1 deadline backfired on the defense sector, the executive recognized. Congress and the public, he said, have yet to appreciate the real damage that automatic cuts are causing to the military and its suppliers.”  (5/7/13)
 
Foreign Policy: High Stakes and the Sequester Squeeze – Gordon Adams
“Let's be clear: Congress is worried about jobs, campaign contributions, and reelection -- even when they cloak the argument in national security verbiage. The defense budget is one of the biggest political games in town… We are a defense drawdown. Nobody should be shocked that less cash means more political tokens on the gaming tables, amplifying the noise coming from the back room. It always has, and only some of those punters will walk away with winnings when the wheel stops spinning. Game on.”   (5/6/13)
 
“A new report this week by the government’s top watchdog over U.S. spending in Afghanistan casts doubt on whether the U.S.-led coalition and the Afghan government has met a goal set in 2011 of enlisting and training a total of 352,000 Afghan security personnel by October 2012. Pentagon officials have said that target was meant to strike a balance between what is needed and what America and its allies can deliver in concert with the Afghan government. The White House declared two months ago, in conjunction with the President’s State of the Union address, that the goal had been attained… But on Tuesday, Special Inspector for Afghanistan Reconstruction John F. Sopko challenged this rosy assessment.”  (5/3/13)
 
International Security: How New and Assertive Is China's New Assertiveness? - Alastair Iain Johnston
“There has been a rapidly spreading meme in U.S. pundit and academic circles since 2010 that describes China's recent diplomacy as ‘newly assertive.’ This ‘new assertiveness’ meme suffers from two problems. First, it underestimates the complexity of key episodes in Chinese diplomacy in 2010 and overestimates the amount of change. Second, the explanations for the new assertiveness claim suffer from unclear causal mechanisms and lack comparative rigor that would better contextualize China's diplomacy in 2010.”  (4/4/13)
 
Reports
 
 
 
Congressional Budget Office: Monthly Budget Review (5/7/13)
 
 
 
 
Congressional Research Service: Instances of Use of United States Armed Forces Abroad, 1798-2013 (5/3/13)
 
 
 
Special Inspector General for Afghanistan Reconstruction: Quarterly Report (4/30/13) 
 
Congressional Research Service: Energy and Water Development: FY2013 Appropriations (4/25/13)
 
 
Congressional Research Service: Major U.S. Arms Sales and Grants to Pakistan Since 2001 (7/25/12)
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