Tuesday, January 31, 2012

1/2712 RD Bulletin: Details of FY13 Budget Emerge

State of Play 

Executive: Yesterday, Secretary Panetta and Gen. Dempsey unveiled key details of the administration’s forthcoming budget request for Fiscal Year 2013, which will seek to cut defense spending by $259 billion from previously planned spending levels over five years.  The administration will request $525 billion for the base defense budget in FY13, and will allow it to rise to $567 billion by 2017.  The Pentagon also will request $88.4 billion for the overseas contingency operations account (OCO), also known as war funding.

Among the savings outlined in yesterday’s announcement, the Army’s active duty end strength will be reduced to 490,000 and the Marine Corps to 182,000, both larger than they were before 9/11; the Air Force will forgo procurement of the Global Hawk Block 30 spy drone, although the Navy variant will continue; and the C-27J joint cargo aircraft and the Humvee recapitalization program will be terminated.  The services will delay procurement of some F-35 Joint Strike Fighters and the Army Ground Combat Vehicle, and will delay development of the Ohio-class replacement submarine by two years.

Finally, Secretary Panetta announced a new round of efficiencies that will save $60 billion over five years; healthcare and compensation reforms that will find $29 billion in savings; and a new round of BRAC.  The size of the military air lift fleet will be reduced by retiring early some C-5As and C-130s, along with the elimination of six tactical air fighter squadrons, and the Navy will retire early seven cruisers and two amphibious ships, while shrinking its fleet to around 250 ships.

In a new memo by Carl Conetta of the Project on Defense Alternatives, he analyses the administration’s FY13 budget request in historical terms and concludes that “base-budget spending jumped 55 percent after inflation between 1998 and 2010.  The new budget plan sets 2013 spending at $525 billion, which is 46 percent above the 1998 level.”  Ultimately, Conetta writes “Spending on the non-war part of the budget during the next five years (2013-2017) will be about 4 percent lower than during the past five (2008-2012) in real terms.  The real (that is, ‘inflation corrected’) change from 2012 will be a reduction of 3.2 percent.”

Legislative: Congressional reaction to the Pentagon’s proposed budget came along mostly partisan lines, with HASC and SASC Republicans expressing concern about the “size and scope” of the cuts.  Lawmakers also voiced opposition to a new round of BRAC, citing the lack of short-term savings that would result.  Four progressive members, led by Rep. Barbara Lee (D-CA) sent a letter to the White House urging it to consider a “fundamental rethinking of our national security strategy,” as well as a “substantial reduction in military spending."

Meanwhile, Congressional Republicans continue to plot over how best to protect the Pentagon from sequestration cuts, with a number of different proposals emerging.  For the first time, Sen. McCain (R-AZ) voiced his interest in preventing the administration from moving forward with its planned reductions of $487 billion over ten years, saying “We're working on another proposal specifically on the $460 billion that's going into effect this year.”  SASC Chairman Carl Levin (D-MI) has reiterated his position that any effort to avoid sequestration cuts must include higher government revenue.

Highlights

Mark Thompson examines the details of the administration’s FY13 budget request and finds that DoD is “proposing fairly tame cuts that resemble nothing so much as a dowager determined to keep the family spread, even as she auctions off all the furnishings that made it what it was.”  (1/27/12)

Budget analysts at CAP express concern that, while the Pentagon budget may drop by $6 billion this year, it will continue to rise after that by $9-14 billion a year.  (1/27/12)

Carl Conetta examines the administration’s FY13 budget request in historical terms and finds that DoD spending, both under current law as well as under sequestration, would still be higher than the inflation-adjusted average for the Cold War years.  (1/26/12)

Dr. Gordon Adams praises the Pentagon’s decision to reduce Army and Marine Corps active duty end strength, but believes that “the long term budget trajectory the Secretary forecast is unrealistically high,” and could lead to unrealistic expectations.   (1/26/12)

Other News and Commentary

With the war in Iraq over and the U.S. troop presence in Afghanistan declining, Bryan Bender explores why the administration has requested $88.4 billion in war funding, which is only 23 percent less than was requested last year.  Many analysts suspect that with declining DoD base budgets, the services are moving some of their funding priorities into the OCO account, with Charles Knight commenting, “There is a lot of room for sloshing funds around.”  (1/27/12)

In analyzing the President’s FY13 budget request, Robert Dreyfuss argues that progressives will be disappointed in the lack of substantial cuts, but that there’s ample room to press for more savings.  (1/27/12)

CNN Security Clearance: Budgeting for a New Military Vision
CNN provides an overview of the first details emanating from the President’s FY13 defense budget request, noting that the administration will have some difficulty getting Congress on board with proposed cuts and changes to the military.  (1/26/12)

National Interest: The Pentagon’s Way Forward
The authors of the recent CNAS report “Hard Choices: Defense in the Age of Austerity,” write that the Pentagon can safely achieve $487 billion in savings over ten years.  However, they argue that sequestration forces too dramatic a drop in defense spending in 2013, and that if additional cuts to DoD are to occur, then they should be phased in gradually.  (1/26/12)

Jeff Smith of the Center for Public Integrity provides a primer on the defense budget and dispels some common misperceptions, including the notion that cutting defense spending is bad for the economy.  (1/26/12)

Speaking at a CAP event, a panel of defense experts, including Dr. Larry Korb, argues that the defense department can safely absorb up to $1 trillion in savings over ten years, and that in fact, sequestration would force the department to engage in smarter budgeting.  (1/26/12)

Arguing that reducing the size of the DoD budget is a bipartisan issue, Benjamin Freeman encourages the President to embrace fiscal responsibility in his upcoming budget request.  (1/25/12)

Philip Ewing looks at a recent GAO report that questions the Navy’s decision to restart the Arleigh Burke-class of destroyers as a cost-cutting measure.  (1/25/12)

Reports and Publications:

Department of Defense: Fact Sheet: The Defense Budget  (1/26/12)

Department of Defense: Defense Budget Priorities and Choices (1/26/12)

Congressional Budget Office: Final Sequestration Report for Fiscal Year 2012  (1/12/12)



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