Thursday, June 7, 2012

6/7/12 RD Bulletin: Pentagon May Be Secretly Planning for Sequestration

Highlights
 
News: CNN reports that the Pentagon may be planning for sequestration cuts in secret, unofficial meetings amongst senior staff.
 
Reports: The Stimson Center has released a new report which estimates that the United States spends $350-390 billion on nuclear weapons over ten years. 
 
PDA Perspective: Charles Knight critiques defense industry warnings of grave consequences to the economy of pending Pentagon budget cuts without acknowledging the effects of sequestration on jobs created by non-defense domestic agencies and related industries or offering more benign options for trimming excessive Pentagon spending as the economy recovers.
 
State of Play
 
Legislative: Congressional Republicans have expressed concern over the Pentagon’s announcement last Friday that, after consultation with the Office of Management and Budget, it has determined that war funds in the OCO account will be subject to the same sequestration cuts that will hit every federal agency early next year.  Republicans accuse the administration, which last year said OCO funds would not be hit by automatic cuts, of using the issue as a political football in the ongoing sequestration fight and of undermining the troops and war effort in Afghanistan.  HASC Chairman Buck McKeon (R-CA) commented, “"I am disappointed the president has made this choice, since there is no clear mandate for it in the law… Of course now, more than ever it is the troops on the front lines in Afghanistan who will bear the brunt of sequestration.” 
 
Commenting on the White House’s decision, the Center for Strategic and Budgetary Assessments’ Todd Harrison tells Politico’s Morning Defense, “The only real impact I can see that this would have is that it will make the cuts more heavily weighted toward [operations and maintenance] because OCO funding is more heavily weighted toward O&M.”  Harrison also notes that the overall impact of sequestration on the Pentagon would remain the same, since OCO funds are not used to determine the total amount of savings required next year.  Despite the recent consternation, the Committee for a Responsible Federal Budget points out that since there are no discretionary spending caps on the OCO account, Congressional appropriators can over-budget war funding and then allow sequestration to cull the excess war funds. 
 
After the Congressional Budget Office (CBO) announced in a report recently that the expiring Bush-era tax cuts coupled with automatic sequestration cuts could push the U.S. economy off a “fiscal cliff,” House Ways and Means Chairman David Camp (R-MI) has begun drafting a one-year extension of all Bush-era tax provisions as well as the Medicare “doc fix.”  In an interesting turn of events, this week CBO released its long-term economic outlook, which found that if current policies (mentioned above) are extended and sequestration is nullified , the United States’ national debt could rise to as high as 200 percent of GDP in 2037.  CBO further predicts that this significant accumulation of debt could cause U.S. gross domestic product to fall by as much as 13 percentage points over the long-term. 
 
The Senate will soon take up a five-year agricultural authorization bill, also known as the farm bill, which Agriculture Committee Chairwoman Debbie Stabenow says could take up to three weeks of Floor consideration.  If true, this means it is unlikely the Senate will take up its version of the National Defense Authorization Act until July at the earliest.  Senate Armed Services Committee members intend to offer amendments to every bill under Floor consideration, including the farm bill, to direct the Pentagon to report back to Congress on the effects of sequestration.  House majority leadership staff has privately indicated that the House version of the defense appropriations bill could be ready for Floor action as soon as the week of June 25. 
 
Last week, the House passed its version of the military construction appropriations bills as well as the annual intelligence authorization act.  Despite a Presidential veto threat over the measure, the House overwhelming passed the military construction funding bill.  And in its intelligence authorization act, the House included approval of the Pentagon’s new proposed spy agency, the Defense Clandestine Service. 
 
The Senate has belatedly released a copy of the National Defense Authorization Act, which was marked up behind closed doors two weeks ago.  The accompanying committee report would block 50 percent of the funding for the next Ford-class aircraft carrier, the USS John F. Kennedy, until the Navy submits to Congress a detailed plan to prevent further cost-growth in the carrier program.  The Kennedy’s price tag has jumped $1.1 billion since the original cost estimate, while the carrier currently under construction, the USS Gerald Ford, will require an additional $811 million in Fiscal Years 2014 and 2015.   The committee report also raises concerns about the “production quality” of the F-35’s electronic warfare capability. 
 
Executive: While in Asia for the annual gathering of the Shangri-La Dialogue, Defense Secretary Leon Panetta announced that pursuant to the United States new Asia Pacific-focused strategy, the Navy will be deploying sixty percent of its assets to the Pacific whereas the fleet is currently split evenly between the Atlantic and Pacific.  As part of its pivot, the United States will soon deploy four Littoral Combat Ships on a rotational basis to Singapore despite new concerns about the vessels’ design problems detailed by reporter Christopher Cavas.   At the annual conference, Japan expressed concern about the rapid rise in Chinese military spending and also over the lack of transparency in the PRC’s defense budget. 
 
Inside Defense reports that the Pentagon has restructured the acquisition plan for the Joint Land Attack Cruise Missile Defense Elevated Netted Sensor System, for savings of $1.75 billion over the next five years.  The trade publication also notes that the Office of Management and Budget exempted the Department of Defense from a recent guidance that requires all executive agencies to trim their budgets by five percent in FY14.   And Congressional lawmakers have been briefed on a new Army plan to increase the survivability of Army Humvees following the earlier termination of the Medium Expanded Capacity Vehicle program, which was intended to recap old Humvees.  Spiegel Online broke a story this week that Germany is in the process of constructing six Dolphin class submarines for the Israeli military which will likely be outfitted with nuclear-armed cruise missiles. 
 
Despite Pentagon claims that the training of Afghan security forces is progressing well, a series of DoD Inspector General reports has raised alarming concerns over U.S. efforts to properly arm and equip its Afghan counterparts.  A May 25 DoD IG report found that “Army contracting officials overpaid millions in American taxpayer dollars to foreign arms suppliers for ‘lower quality’ weapons that were subsequently ‘delivered late or not at all.’”
 
This week, the Stimson Center issued a new report entitled Resolving Ambiguity: Costing Nuclear Weapons, which estimates that the United States spent $31 billion on nuclear weapons activities in Fiscal Year 2011.  The report, which was principally authored by Russell Rumbaugh, projects that the United States will spend $350-390 billion on nuclear weapons over a ten-year time period. 
 
The Center for Strategic and International Studies (CSIS) has launched a new project intended to highlight the Navy’s humanitarian mission in a time of tightening federal budgets.  At the launching of the project this week, former Defense Secretary and current CSIS president John Hamre warned that deep defense reductions could impact the Navy’s two hospital ships and the size of its amphibious assault ship fleet, the latter of which sometimes provides disaster response capabilities.  If the Navy fears that its shipbuilding account may take too big of a hit in upcoming budget negotiations, it may begin playing up its humanitarian mission to counter those calling for further Navy savings. 
 
Project on Defense Alternatives Perspective: In June 6th article by Nathan Hodge in the Wall Street Journal, Lockheed Martin chairman Robert Stevens is quoted saying the defense industry plans to use a “full-throated voice” to call attention to likely job lay-offs if the Pentagon budget cuts that are now the law take place next January.  Implicit is the pressure that industry and its allies will organize in this election year and while the economy is still weak to compel the Administration and Congress to commit to a roll back of the Budget Control Act’s provisions for Pentagon budget cuts.  This is not new. 
 
The Aerospace Industry Association and conservative think tanks in Washington have been beating this drum steadily since the last fall.  Consistently missing in their collective narrative is mention of the job loss effect if the budgets of domestic agencies such as Health and Human Services, Housing and Urban Development, and Education are cut further in deference to Pentagon privilege.  Also missing is any suggestion that the job losses following defense budget reductions can minimized if cuts are phased in over the next several years of economic recovery with the largest cuts happening when the economy is stronger later in the decade.  It is time for responsible leadership to call attention to better options than letting the Pentagon and Lockheed Martin continue to ride high on the hog.
 
News and Commentary
 
Washington Post: Slack budgeting at Defense
Walter Pincus discusses the consternation being felt by lawmakers over how to trim the defense budget.  Congress is finding it tough to adhere to the discretionary spending caps set in law by the Budget Control Act, and is currently proceeding with authorization and appropriations bills that would set defense spending above the amount requested by the President and above the BCA caps.  Instead of cutting boondoggles like the F-35, which is billions above its cost estimate, or the millions of dollars spent on military bands, Congressional Republicans have cut spending on mandatory and social insurance programs.  “While other departments and agencies have to be listened to when they complain about budget pressures, it’s hard… to show much sympathy to moans from the Pentagon.”  (6/6/12)
 
A former aide to Vice-President Joseph Biden, Jon Wolfsthal, says that the heads of U.S. national laboratories, Lawrence Livermore, Los Alamos, and Sandia, recommended that President Obama delay construction of the new CMRR nuclear facility in his FY13 budget request submission.  Wolfsthal reports that the laboratory heads were concerned about cuts to the National Nuclear Security Administration budget and concluded that “there’s a way you can do the necessary sampling of plutonium work to allow us to have a certain pit production rates in the midterm, without having to build CMRR.”  The President ultimately heeded their advice and has proposed delaying the project by five years.  (6/5/12)
 
Huntington Ingalls Industries is currently constructing two new big deck amphibious assault ships, also known as “mini-carriers,” neither of which will be outfitted with floodable well decks in order to maximize space for the V-22 Osprey and F-35B variant of the Joint Strike Fighter.  Given the myriad problems with the F-35B, David Axe wonders if “The Navy and Marines run the risk of deploying miniaturized aircraft carriers without aircraft.”  (6/4/12) 
 
In making his case for the prioritization of the Armored Multi-Purpose Vehicle (intended to replace the M-113), the Lexington Institute’s Daniel Goure admits that “Defense budgets are almost certain to decline significantly over the next decade no matter who is in the White House.”  Goure also notes that, even if sequestration does not take place, the Pentagon “will have to make choices among competing modernization priorities and programs.”   (6/4/12) 
 
Former Bush administration Pentagon comptroller Tina Jonas says the Defense Department has a basic responsibility to show the public and Congress that it is budgeting for sequestration cuts.  However, the Project on Government Oversight’s Winslow Wheeler believes the department already is planning for such cuts because “absent divine intervention,” Wheeler predicts the cuts will take place as scheduled early next year.  The article also notes that reports have emerged of “secret, unofficial meetings among senior Pentagon staff to discuss where cuts will have to happen.”  Meanwhile, Defense Secretary Leon Panetta is “confident” that Congress will find some way to avoid the automatic cuts, saying “I know of no Republican, no Democrat, who believes [sequestration] should happen.” However, the Secretary is adamant that Congress nullify sequestration before the November election, because if it waits until the lame-duck session, it may be too late for Pentagon budget planners.  (6/4/12)
 
While warning constituents in South Carolina that sequestration cuts could force the termination of the F-35 and “devastate” the local C-17 fleet, Sen. Lindsey Graham (R-SC) indicated that his party is increasingly open to supporting some form of government revenue increase, including closing tax loopholes and removing fossil fuel subsidies, as a means of blunting the impact of scheduled automatic cuts.  Regarding many Republicans’ pledge not to increase new taxes, Graham says he’s “crossed the Rubicon on that.”  (6/3/12)     
 
Washington Times: Wanted: New planes
In making the case for a large Air Force modernization plan, former secretaries F. Whitten Peters and Michael Wynne opine that “the Air Force was never supposed to have a fleet whose average age exceeded a quarter of a century.”  The authors also note that the Air Force has put on hold three previous attempts to modernize its fleets, during the post-Cold War “peace dividend,” during the wars in Iraq and Afghanistan, and now due to budget constraints.  The two argue that this has “dramatically [curtailed] the range of U.S. policy options.”  (6/1/12)
 
The New York Times broke an exclusive story this weekend that the Obama administration has significantly ramped up a program, begun under the Bush administration, to target Iran’s nuclear program with sophisticated cyberweapon technologies developed and deployed in conjunction with Israel.  The program’s most public success was the “Stuxnet” virus which temporarily took offline one fifth of Iran’s nuclear centrifuges.  The Times’ editorial board wonders if this portends a new era of “mutually assured cyberdestruction,” while the Chairman and Ranking Member of the Senate Armed Services Committee have vowed to hold public hearings on the high-profile leaking of national security stories, including the Times’ piece mentioned above.  (6/1/12)
 
Foreign Policy: The Enemy Within
The editor of Foreign Policy, David Rothkopf, argues that the United States is perennially in search of a new sovereign enemy as a means of justifing increases in military and intelligence spending.  However, Rothkopf asserts that the real dangers lie at home in political obstructionism that blocks much-needed economic and social reforms.  (May/June, 2012)
 
Reports
 
Congressional Budget Office: Changes in CBO's Baseline Projections Since January 2001 (6/7/12)
 
 
Congressional Budget Office: The 2012 Long-Term Budget Outlook (6/5/12)
 
 
 
 
Congressional Research Service: Pakistan-U.S. Relations (5/24/12)
 
 
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