Highlights
News: Last week, the House adopted an amendment
offered by Representatives Mick Mulvaney (R-SC) and Barney Frank (D-MA)
to cut more than $1 billion from the annual defense appropriations bill –
effectively freezing the bill’s topline amount at last year’s enacted
spending level.
Reports: The Congressional Budget Office has found
that the Navy underestimated the thirty-year costs of its shipbuilding
plan by more than $90 billion. This follows a recent CBO analysis which
found that the Pentagon underestimated the ten-year costs of its
overall budget by $123 billion.
State of Play
Legislative: Last Thursday, the House passed its annual defense appropriations bill,
which would provide $518.1 billion in non-war defense funding, and
$87.7 billion for Overseas Contingency Operations (OCO).
Representatives Mick Mulvaney (R-SC) and Barney Frank (D-MA) offered an
amendment, which was adopted by a vote
of 247-167, to cut roughly $1.1 billion from the bill’s topline
appropriated amount – effectively freezing defense spending at last
year’s enacted level. Most of the Democratic leadership, including
Appropriations Committee Ranking Member Norm Dicks (D-WA) and House
Armed Services Committee Ranking Member Adam Smith (D-WA) supported the
amendment, as well as several key allies of House Speaker John Boehner,
such as Representatives Jeb Hensarling (R-TX), Tom Latham (R-IA), and
Rules Committee Chairman David Dreier (R-CA). The White House has already issued a veto threat
against the House defense spending bill, because it would violate
discretionary spending sub-caps implemented by the Budget Control Act.
Congresswoman Barbara Lee (D-CA) offered an amendment that would have
cut roughly $7.5 billion from the bill’s topline – bringing the
legislation in conformity with the Budget Control Act’s
defense/non-defense sub-caps, however the amendment failed by a vote of 171-243.
During Floor debate on the House measure, Representative Mulvaney
highlighted the presence of roughly $5.6 billion in personnel funding
included in the OCO account – funding which has traditionally been
provided out of the Pentagon’s base budget. Since the OCO account is
not subject to the same statutory budget limits as other federal
accounts, the White House and Congress will likely continue to transfer
funding from the base account into the OCO account as budgetary
constraints increase. While an amendment by Representative Mulvaney to
transfer the funding from the OCO account back into the base budget was
not ruled in parliamentary order, Mr. Mulvaney was able to pass a “messaging amendment” highlighting his concerns with OCO account budgetary gimmicks. A recent report
published by analysts at the Project on Defense Alternatives and the
Cato Institute also noted the transfer of base budget funds into the OCO
account and recommended rectifying this in order to enhance
accountability and transparency in the defense budget.
In new analysis provided by Russell Rumbaugh of the Stimson Center,
he concludes that following House passage of the Defense, Energy and
Water, Homeland Security, and Commerce, Justice and Science spending
bills, all of which include some form of function 050 defense spending,
the House is now approximately $6 billion above the defense sub-cap
implemented by the Budget Control Act. If the House’s spending levels
are passed into law (which is unlikely), then Congress would need to
deal with an additional $6 billion defense sequester on top of the
roughly $55 billion defense sequester that will occur on January 2,
2013. Says
Rumbaugh, “If these amounts became law, the House would need the Budget
Control Act revised not just to avoid the sequester stemming from the
supercommittee failure, but because they face sequester for breaching
these Budget Control Act caps.”
Since Senate Majority Leader Harry Reid has indicated he does not
intend to bring any additional appropriations bills to the Senate Floor
before the end of the Fiscal Year on September 30, 2012, Congress will
be required to pass a Continuing Resolution either into December or past
the new year and into the spring. This will present the first serious
opportunity for Congress to either delay implementation of or completely
nullify the $110 billion sequestration of federal funds currently
scheduled to take place on January 2, 2013.
In reference to inclusion of a potential delay of sequestration in the Continuing Resolution, Senator Kelly Ayotte (R-NH) recently said
“You could absolutely attach it to a CR. That would be a vehicle that
would work well.” Ultimately, the final decision on the CR’s spending
level will be made by
Majority Leader Reid and House Speaker Boehner behind closed doors.
The two leaders will have to decide whether to adhere to the overall
statutory discretionary spending cap implemented by the Budget Control
Act last August or the lower discretionary spending cap approved by the
House via Chairman Paul Ryan’s (R-WI) budget plan. And it appears that
some senior House Democrats, including Minority Whip Steny Hoyer (D-MD)
and Appropriations Committee member Jim Moran (D-VA), seem to be warming to the idea of a six-month CR
that would punt the fight over appropriations past the election and
into the spring. Moran commented, “We should delay dealing with taxes
and the sequester and everything else until the results of the election
sort themselves out. Then I think we ought to have a complete reset,
both of the budget and of the tax code.”
In other Senate news, Majority Leader Reid has decided to proceed with a cybersecurity bill
instead of bringing the National Defense Authorization Act to the
Senate Floor this month, all but guaranteeing that consideration of the
measure will be pushed into the fall or lame-duck session of Congress.
Voicing his concern that debate on the NDAA would focus too much on
sequestration and the Budget Control Act, Reid recently said,
“If we’re going to debate the defense bill, House and Senate
Republicans need to make it clear they’re willing to abide by the budget
levels set by law that they voted for with rare exception. We must also
ensure that the defense bill is not used as a platform to advance
irrelevant, partisan agendas.”
Executive: The Congressional Budget Office has released a new analysis
of the Navy’s thirty year shipbuilding plan, which found that the Navy
underestimated the costs of the plan by 19 percent. The Navy envisions
procuring 268 new vessels over the next thirty years – spending $16.8
billion per year for a total of $505 billion over the same time period.
However, CBO estimates that the Navy will likely spend $20 billion per
year on shipbuilding for a total of $599 billion over thirty years. If
one includes the additional costs of maintaing nuclear-powered aircraft
carriers, the CBO estimate rises to $22 billion per year – 37 percent
more than the Navy has spent on shipbuilding over the past three
decades. This follows a recent CBO analysis which found that the Pentagon had underestimated the ten-year costs of its five-year budget by $123 billion.
During his confirmation hearing
to replace retiring Air Force Chief of Staff, Gen. Norton Schwartz,
Gen. Mark Welsh admitted that the Air Force’s FY13 budget submission is
“simply not executable” in the face of stiff opposition from Congress
and state governments to the retirement of Air National Guard assets,
but that the general still support’s the proposal. However, Air Force Secretary Michael Donley warned Congress
that it must approve the Air National Guard cuts or else risk doubling
down on future cuts to the service’s active duty components. During his
confirmation, Welsh also noted that Gen. Schwartz has ordered the
service to continue deployment of Global Hawk Block 30 drones despite
the White House’s FY13 budget request that proposed retiring the Block
30 fleet, and told senators that he supported further consolidation and merging of Air Force facilities in Europe. Finally, Welsh acknowledged that ongoing problems in Air Force weapons acquisition
is imperiling the service’s modernization plans and causing the average
age of aircraft to increase above historical rates. Welsh asserted
that successfully procuring the F-35 Joint Strike Fighter, the KC-46
next-generation tanker, and the Long-Range Strike Bomber are imperative
to Air Force recapitalization efforts.
Meanwhile, current Chief of Staff Schwartz, who is set to retire on August 10, 2012, indicated to reporters
that the service plans on fielding the Long-Range Strike Bomber, also
known as the next generation bomber, by the mid-2020s. Previously, Schwartz has said that the per-unit cost of the bomber will be capped at $550 million.
National security officials recently briefed Senate Intelligence
Committee Chairwoman Diane Feintstein on cost growth associated with the
B61 nuclear weapon life extension program (LEP). The B61 LEP was
originally estimated to cost $4 billion, however according to the most
recent estimates provided by the Pentagon’s Office of Cost Assessment
and Program Evaluation, it will now cost $10 billion.
Concern in Congress is growing over the escalating costs of National
Nuclear Security Administration programs, including the construction of a
new uranium processing facility at the Y-12 complex in Tennessee, which
has ballooned from its original 2004 cost estimate of $600 million to
as much as $7.5 billion today. In its FY13 budget request, the White
House proposed delaying construction of the new Y-12 facility
for $1.8 billion in savings over five years in order to free up funding
for the B61 LEP, however, the estimated savings would barely cover half
of the cost increase in the B61 LEP.
Defense Secretary Leon Panetta and his deputy, Frank Kendall, recently met with leading military contractors
to discuss the impact of potential sequestration on the defense
industrial base. While industry executive did not outline a plan to
push Congress into nullifying the sequester, they agreed that they must
mount pressure on non-defense domestic federal agency heads to lobby
Congress against the automatic cuts scheduled to take effect early next
year.
During an interview with National Journal,
a top advisor to GOP Presidential candidate Gov. Mitt Romney, John
Lehman, said that if Congress wants to reduce the impact that funding
cuts have on the economy, then it should cut earned benefit programs,
like Medicare, instead of culling savings from the Pentagon’s budget.
This, despite a recent UMASS Amherst report which found that per-billion dollars spent, health care funding is far more economically stimulative then defense spending.
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Project on Defense Alternatives Perspective: The defense spending bill
passed by the House last week included an amendment cutting $1.1
billion from bill’s topline amount. As a result of the "Mulvaney-Frank"
amendment (and earlier cuts to Military Construction spending),
the Defense Department’s base budget will be slightly below its 2012
level, a level that may well prevail when Congress passes a Continuing
Resolution in the fall. No doubt, the Mulvaney-Frank amendment's
passage is a significant defeat for defense hawks on the House Armed
Services Committee who have sought to boost defense spending this
year.
Several aspects of the recently passed defense spending bill still give
cause for concern: First, it adds billions to the President’s February
budget request, which was already above current law spending caps.
Second, according to Russell Rumbaugh
of the Stimson Center, the House is now on track to exceed by $6
billion the function 050 defense sub-cap put in law by last
year's Budget Control Act (BCA). Third, the Administration has slipped
between $4.5 – 5.6 billion in base budget funding into the Overseas
Contingency Operations (OCO) account, and Congress has to date played
along. So, total military spending is currently estimated to be $10
billion to $12 billion greater than if the White House and Congress
adhere to current law spending sub-caps and resist accounting tricks.
That's not small change. It’s about a 2 percent bonus for the
Pentagon.
The mischief around OCO accounting is especially vexing. If the
maneuver is allowed this year, it becomes more likely to occur again –
indeed, every time there is a legislative attempt to rein-in spending.
As we and our colleagues at the Cato Institute point out in Defense Sense,
the integrity of any deficit reduction process “depends on foreclosing
the use of accounting measures to give the false appearance of savings.”
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News and Commentary
National Interest: The Failures of Missile Defense
Philip Coyle, a senior science fellow at the Center for Arms Control
and Non-Proliferation, highlights two recent reports on missile defense
published by the Defense Science Board and the National Research Council
which show that Missile Defense Agency (MDA) programs “are chasing
scientific dead ends, unworkable concepts and a flawed overall
architecture.” Coyle notes that the MDA and missile defense contractors
are focused on procuring and fielding new technologies instead of
ensuring that said technologies are scientifically proven and useful in
the field. Coyle writes, “Achieving effective missile-defense
capability requires proven science. Without it, the current systems
cannot overcome the fog and confusion of battle. Without it, deploying
expensive hardware is throwing good money after bad.” This follows a recent GAO analysis which found that many MDA programs are not following best schedule practices identified by the watchdog agency. (7/26/12)
DoD Buzz: How could the Navy begin to remake LCS?
“The only thing that’s clear anymore about the Navy’s littoral combat
ships is that they haven’t turned out as hoped,” observes Philip Ewing.
He notes that not only have whistle-blowers called out the LCS for its
unpredictable performance, but increasingly the Navy is skeptical as to
whether the ship can accomplish even the simplest tasks. Ironically the
service has entangled itself in both dependence upon and frustration
with the LCS, as contractors modify the ship and the Navy attempts to
correct the vessel’s less-than-expected role capacity. (7/24/12)
Bloomberg View: Pentagon and Contractors Need to Plan for Budget Warfare
Due to Congressional intransigence and election year politicking, a Bloomberg View
editorial urges the White House and OMB to begin preparing backup plans
for the potential of sequestration. Because the automatic cuts will
hit big-ticket items like the F-35 Joint Strike Fighter and
Virginia-class submarine, the op-ed board believes the Pentagon must
begin planning now on how to reprogram the automatic cuts and ultimately
pick winners and losers in the defense budget. (7/24/12)
Battleland: What Defense Cuts?
Mark Thompson highlights a recent Congressional Budget Office chart
which estimates Pentagon spending projections out over twenty years
according to a number of different scenarios. The chart shows that
under BCA’s current spending caps and under sequestration, defense
spending would rise with inflation over the next ten years before it
begins increasing steadily again. Thompson comments, “Only by turning
your level upside down and standing on your head can you call those flat
lines ‘cuts’ in the normal taxpayer sense of the word.” (7/20/12)
Army National Guard infantry officer Peter Hegseth acknowledges that the American public supports
increased defense spending reductions compared to what the White House
and Congress are currently considering. However, Hegseth warns that the
so-called “meat ax” approach of sequestration would harm the United
States’ troops and veterans who rely upon federal programs, and instead
urges Congress to “target the systemic inefficiencies, duplicative
programs, cost overruns, and endemic waste that permeates the Pentagon
budget and bureaucracy.” (7/20/12)
Hegemonic Obsessions: Sequestration and the Limitlessness of Congressional Stupidity
Former Cato Institute analyst and contributor to the Sustainable Defense Task Force report,
Hans-Inge Langø argues that sequestration was an excellent incentive
for Congress to achieve significant deficit reduction, but that
legislative intransigence has stymied the law’s best efforts. Langø
agrees that automatic, across-the-board cuts are not the best way to
cull savings from the Pentagon’s budget, however he points out that a
number of panels, including SDTF and the Dominici-Rivlin task force,
have outlined ways for the defense department to achieve substantial
savings over the next ten years, but rather than consider these
recommendations, the department has simply resorted to fear mongering. (7/20/12)
Commenting on a July 18 HASC hearing featuring representatives of the
defense industrial base, Winslow Wheeler observes that Democrats on the
panel “didn't buy any of what McKeon and the manufacturers were putting
down; actually, they made the hearing into an embarrassment to McKeon
and his industry sidekicks.” Commenting on the potential of automatic
sequestration cuts scheduled to take effect next year, Wheeler writes,
“The truth is the amount left by the sequester is historically
generous...the chasm between their rhetoric and the facts has become so
gigantic that people in Washington are actually beginning to notice.” (7/19/12)
Foreign Policy: Stuck in the Mud The Logistics of Getting Out of Afghanistan
In a comprehensive piece, Vanda Felbab-Brown reports on the logistical
challenges facing the United States and NATO in redeploying massive
amounts of military hardware from Afghanistan by 2014. According to
NATO estimates, “in order for all International Security Assistance
Force (ISAF) military equipment to be removed from Afghanistan in time, a
container would have to leave the country every seven minutes, 24 hours
a day, seven days a week, starting now.” (7/18/12)
Reports
Congressional Budget Office: An Analysis of the Navy’s Fiscal Year 2013 Shipbuilding Plan (7/25/12)
Government Accountability Office: Afghanistan Security: Long-standing Challenges May Affect Progress and Sustainment of Afghan National Security Forces (7/24/12)
Government Accountability Office: Schedule Best Practices Provide Opportunity to Enhance Missile Defense Agency Accountability and Program Execution (7/19/12)
Congressional Research Service: Defense Surplus Equipment Disposal: Background Information (7/18/12)
U.S. Army War College: Guide to National Security Issues, Vol. 2: Theory of War and Strategy, 5th Ed. (6/22/12)
U.S. Army War College: Guide to National Security Issues, Vol. 1: Theory of War and Strategy, 5th Ed. (6/22/12)
