Highlights
News: A
bipartisan group of House members wrote to the White House and
Congressional leadership this week requesting that significant savings
from the Pentagon budget be included in a “grand bargain” deal to avert
the fiscal cliff.
News: Bloomberg is reporting that former Senator Chuck Hagel (R-NE) is likely to be nominated as the next Secretary of Defense.
PDA Perspective: Responding
to recent comments by Navy Under Secretary Robert Work, PDA co-director
Charles Knight discusses the importance of Congress in helping the
Pentagon manage the current defense builddown.
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State of Play
A bipartisan Congressional group this week submitted a letter to President Obama and Congressional leaders
urging that “substantial defense savings” be included as part of any
deficit reduction budget agreement. The signatories, led by
Representatives Mick Mulvaney (R-SC) and Keith Ellison (D-MN), included
eleven Democratic and eleven Republican members of the U.S. House of
Representatives. Noting that “how we spend our resources is just as
important as how much we spend,” the letter argues that “substantial
defense savings can be achieved over the long-term, without compromising
national security.” According to the authors, future budgets should
reflect the conclusion of recent wars and, more generally, a reduced
requirement for military resources: Between 1998 and 2010, the Pentagon
budget grew by 92 percent in real terms, making it a debt and deficit
leader.
As part of this spending surge, routine
Pentagon spending rose 49 percent in real terms. Since 2010, war
spending has declined in accord with reduced war requirements. However,
routine Pentagon spending has shown little improvement. It is down
less than 5 percent from its 2010 high point, despite the nation's
fiscal woes and the pending prospect of substantial tax increases. The
Mulvaney-Ellison letter noted that several prominent think tanks,
including the Project on Defense Alternatives and Cato Institute, have
called for additional reductions to defense spending of at least $550
billion over ten years. Earlier this year, Mr. Mulvaney was joined by
Representative Barney Frank (D-MA) in spearheading a successful effort
to freeze defense spending at last year’s enacted level when the House
approved its annual defense appropriations bill.
Much of the recent attention in
Washington has been focused on the large “fiscal cliff” the United
States faces early next when a host of Bush-era tax provisions expire
and $109 billion in automatic cuts known as sequestration take effect.
The sequester is scheduled to begin on January 2, 2013, due to the
failure of the Joint Select Committee on Deficit Reduction to produce a
$1.2 trillion deficit reduction package that Congress could enact.
Separate from the Budget Control Act’s sequester provision, the law also
implemented statutory budget caps intended to constrain defense and
non-defense spending over the next decade.
Interestingly, the six-month Continuing
Resolution, which was passed in September, set defense spending above
the sub-cap implemented by the Budget Control Act. As a result, defense
spending now faces a second “mini-sequester” of at least $11 billion
come January 2013, in addition to the roughly $55 billion large
sequester due to kick in. Congress may take action before the end of
the calendar year to avert the larger sequester, and an unnamed
Congressional aide told CQ Today
that they expect both sequesters to be nullified when and if Congress
delays the fiscal cliff, saying, it is “hard to believe that they would
do a fiscal cliff deal and not address this lingering $11 billion in
2013.”
President Barack Obama and House Speaker
John Boehner (R-OH) continue to discuss ways to avert the fiscal cliff
and enact long-term deficit reduction legislation – although the two
sides seem to be making little public progress. In recent weeks, both
sides have offered outlines for a “grand compromise,” but neither side
seems very willing to seriously consider the other’s proposal. Republicans are now calling on Democrats to specify exactly how they would enact additional cuts to domestic spending,
while Democrats are waiting for the other party to specify how they
would draw additional federal revenues either through increased tax
rates or the elimination of tax deductions and preferences. While the two sides publicly attack each other, the President and Speaker continue to negotiate privately.
The White House remains steadfast in its opposition to any compromise
that does not include increased tax rates on the wealthiest Americans. A
growing number of rank-and-file Republicans, including Representative Tom Cole (R-OK) and Senator Tom Coburn (R-OK), seem to be warming to that proposal.
While virtually no one in Washington
expects Congress to enact a “grand compromise” deal before the end of
the year, Congress still has the opportunity to delay the impending
fiscal cliff while implementing a “down-payment” of savings in the
short-term, which House Budget Committee Ranking Member Chris Van Hollen
(D-MD) says could be done “very quickly.” Still, TPM’s Brian Beutler reports
that for the first time both the White House and Congress seem to be
“earnestly contemplating the possibility that December will come and go
without a deal to eliminate or delay the sequester’s spending cuts; to
extend expiring measures like the payroll tax holiday; to provide
emergency unemployment benefits; to protect Medicare physician
reimbursement rates; and without having raised the debt ceiling.”
The pessimism in Washington seems to be seeping into the defense industry as well. Politico’s defense reporter Philip Ewing notes that,
“Industry executives who once threatened to embarrass the government
into acting now attempt to reassure investors that sequestration
wouldn’t be a ‘guillotine,’ but only a ‘speed bump.’” Ewing further writes,
“The defense establishment’s best hope is the negotiations between
Obama and Boehner, which could yield a less onerous path toward spending
cuts than the one laid out under sequestration.” Coincidentally, the
Project on Defense Alternatives has released a report which shows
exactly that: How to achieve sequestration-level savings in the defense
budget in ways that mitigate short-term economic pain and avoid
institutional disruption to the armed forces. For more details on PDA’s
recent report, a Reasonable Defense, click here for a new executive summary.
Though it remains unclear whether
Congress will be able to punt on sequestration in the short-term,
several think tanks have called on the legislature to enact a
down-payment of savings if it delays the onset of the fiscal cliff. Taxpayers for Common Sense sent a letter
to the President and Congressional leadership asking them to “forge a
short term agreement that includes increased revenues and spending cuts
that delay the impending sequester and directs the 113th Congress to
take up meaningful tax, spending, and entitlement reform proposals in a
transparent and orderly way.” Separately, several defense analysts at
the Center for American Progress have identified $100 billion in defense cuts that could serve as a down-payment in advance of further defense reductions.
In weapons systems news, AOL Defense’s Colin Clark reports
that Air Force acquisition costs have declined by $7 billion or two
percent over the past year. The savings have accrued primarily from 26
large Air Force acquisition programs. The Pentagon and Lockheed Martin
have reached a tentative deal on a fifth round of low-rate initial production F-35 Joint Strike Fighters.
The batch will cost $3.8 billion for 32 fighter aircraft. Lockheed
officials say the fifth batch of F-35s is approximately 14 percent
cheaper than the fourth batch. Separately, the Pentagon’s inspector
general is conducting an investigation into quality assurance management
in the F-35 program. Although the investigation is still underway, the
IG indicated in a semi-annual report to Congress that it has sent four “notices of concern” to the program office, which have since been accepted.
According to Bloomberg,
the Pentagon is expected to request funding for 29 additional F-35s in
its Fiscal Year 2014 budget. And speaking of its FY14 budget request, Inside Defense reports
that the Pentagon will cut $100 million from the Ground Combat Vehicle
program in its forthcoming budget, and that sources say an additional
$600-700 million could be cut from the program in the future. The
Ground Combat Vehicle is intended to replace the aging Bradley fighting
vehicle.
Secretary of Defense Leon Panetta was in
Afghanistan this week discussing future troop levels with U.S.
commanders and Afghan officials. The Los Angeles Times reports
that the Pentagon and White House have decided to retain 6,000-9,000
troops in the country after the bulk of NATO forces withdraw in 2014.
Meanwhile, in its semiannual report to Congress
on progress in Afghanistan, the Pentagon painted a bleak picture of the
country moving forward: the report found that Afghan security forces
are largely unable to operate without NATO support, corruption continues
to plague the Afghan government, safe havens for militants in Pakistan
remain a problem, and that violence is higher than it was prior to
President Obama’s “troop surge.”
The National Intelligence Council has released a report predicting
what it describes as a series of “megatrends” that will shape the world
by 2030. The most notable predictions include a boom in the size of the
global middle-class and consequent decline in poverty; diffusion of
world economic and military power to Asia; and a world population of 8.3
billion. The report also notes specifically that the U.S. will likely
lose its superpower status, but that no that country will take its place
and it will retain a position as “first among equals.”
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Project on Defense Alternatives Perspective
Addressing a Government Executive breakfast last week,
Navy Under Secretary Robert Work spoke of the need for Congress to make
‘strategic’ decisions about the Pentagon budget: “We're in the fifth
defense drawdown since the end of World War II. It's not like this is
something we haven't done before [and] whenever there is a defense
downturn, that is where the Congress's role is absolutely most
important, because you have to make broad strategic choices.”
Imagine for a minute Congress actually
deliberating and making decisions about strategic priorities instead of
fighting in the weeds over the distribution of ship and aircraft
contracts, and resisting base closures. Hard to do, because Congress
has long been content to allow the White House to set strategic
direction, and in recent decades the White House has tended to cede that
power to the Pentagon chiefs. So Work probably doesn’t mean that he
wants a debate in Congress on broad strategic choices, but rather that
he wants Congress to make investment decisions that recognize and
underwrite the Pentagon’s new strategic direction.
Air Force Under Secretary Jamie Morin,
also a presenter at the breakfast, added, “The fiscal environment made
it all the more pressing, but we needed to relook the defense strategy
regardless of the fiscal environment.” The so-called ‘pivot to the
Pacific’ constituted the strategic framework for the administration’s
FY2013 budget. “We made a very good first effort in the 2013 budget
submission,” Morin said, “[but] we still don't have a 2013 budget
enacted by Congress, so to some extent we haven't even started that
shift in the real world of execution.”
It is the Air Force and the Navy which
stand to benefit most from the “pivot to the Pacific” and what these
Under Secretaries seem to be saying is that they want Congress to
endorse the new strategic direction and reserve relatively more
resources for the most Pacific-relevant services. Both the Navy and
the Air Force have many costly weapon platforms they want to buy this
decade. Work and Morin are essentially arguing that money should flow
in their services’ direction rather than go to the Army which has been a
big consumer during the decade plus of the Iraq and Afghan wars.
As many have noted, the “pivot to the
Pacific” has few particulars to date. And there are many ways to shift
relatively more attention to the Pacific region without investing in
more military instruments. We at PDA believe that an appropriate
strategic reset demands that all the services moderate their military
ambitions to conserve American resources for other strategic needs and
goals. Even if the Army takes the biggest hit, there will be fewer
ships for the Navy and fewer air wings and new planes for the Air Force.
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News and Commentary
Foreign Policy: The Checklist Manifesto – Lawrence Korb
“Leaders from both branches of government
and both political parties agree that the amount of money that the
United States can and should spend on defense must be part of the
discussion on how to reduce the federal deficit. But in their
deliberations, they must keep in mind that they cannot buy perfect
security. Even if the Obama administration and Congress were to give the
Pentagon the entire federal budget or the whole gross domestic product,
there would still be risks and unforeseen developments. But, in
deciding how much of the nation's scarce resources to allocate to
national security, political and military leaders can minimize those
risks by considering five interrelated factors.” (12/12/12)
Huffington Post: Contractors: The Pentagon Isn't a Jobs Program – Ben Freeman
“At a National Press Club event last
Monday, attended by the Project On Government Oversight, the Chief
Executive Officers (CEO) of two contractors called for cutting Pentagon
spending. Wes Bush, CEO of Northrop Grumman and 2013 Chairman of the
Aerospace Industries Association (AIA), suggested Pentagon spending cuts
in the $20 to $25 billion range over the next ten years. David
Langstaff, CEO of The Analytic Science Corporation, went even further,
arguing that the Pentagon budget should be cut by around $150 billion
over 10 years. Langstaff also chastised some in his industry for being
‘unwilling to park short-term self-interest…we need to stop pretending
there’s a scenario out there that offers no defense cuts.’” (12/12/12)
Democracy: The New Mandate on Defense – Rep. Barney Frank
“Deficit reduction over the long term
must include significant reductions in military spending along with tax
increases on the very wealthy if we are to avoid devastating virtually
everything we do to promote the quality of life at home. A realistic
reassessment of our true national security needs would mean a military
budget significantly lower not only than the one President Obama
inherited, but that which he now proposes. That is, by next year, we no
longer should be forced to spend additional funds—close to $200 billion a
year at their peak—in Afghanistan and Iraq. Additionally, we can reduce
the base budget by approximately $1 trillion over a ten-year period
(this includes the $487 billion reduction that President Obama proposed
in early 2012) while maintaining more than enough military strength to
fully protect our security and those of our allies that genuinely need
help because they are too poor and weak in the face of powerful
enemies.” (12/12/12)
CNN: Get real and cut Pentagon spending - Lt. Gen. Robert Gard (ret.) and Brig. Gen. John Johns (ret.)
“Too often, the Pentagon spending debate
is ensnared in the outmoded ideology of past wars and driven by legions
of lobbyists for parochial interests in the military-industrial
complex. America's power is more than a massive force structure and
numbers of ships, tanks and planes. A national security strategy must be
based on current and future threats, not past war doctrines.” (12/12/12)
National Interest: The Debt Ceiling Allowance – Bruce Fein
“The 113th Congress should brandish its
debt ceiling power to diminish the current annual $1.2 trillion in
national-security spending. It should align defense spending with
genuine dangers to our sovereignty, as opposed to inflated threats.
National-security expenditures should honor the creed: Billions for
defense, but not one cent for empire or a quest for a risk-free
existence. A national security budget of $500 billion would still dwarf
the defense spending of any conceivable rival nation.” (12/11/12)
Washington Post: Senate moves to block Pentagon plans to increase number of spies overseas – Greg Miller
“The Senate has moved to block a Pentagon
plan to send hundreds of additional spies overseas, citing cost
concerns and management failures that have hampered the Defense
Department’s existing espionage efforts. A military spending bill
approved by the Senate last week contains language barring the Pentagon
from using funds to expand its espionage ranks until it has provided
more details on what the program will cost and how the extra spies would
be used. The measure offers a harsh critique of the Pentagon’s
espionage record, saying that the Defense Department ‘needs to
demonstrate that it can improve the management of clandestine [human
intelligence] before undertaking any further expansion.’” (12/10/12)
New York Times: Billion-Dollar Flop: Air Force Stumbles on Software Plan – Randall Stross
“In policy circles, problems that are
mind-bogglingly difficult or impossible to solve, like global warming,
are formally termed ‘wicked.’ For the United States Air Force,
installing a new software system has certainly proved to be a wicked
problem. Last month, it canceled a six-year-old modernization effort
that had eaten up more than $1 billion. When the Air Force realized that
it would cost another $1 billion just to achieve one-quarter of the
capabilities originally planned — and that even then the system would
not be fully ready before 2020 — it decided to decamp.” (12/8/12)
The Atlantic: Why Not Push the Pentagon off the Fiscal Cliff?– Robert Wright
“This week the White House Budget Office
directed it to plan for $500 billion in cuts it may have to make over
the next ten years if cliff-averting negotiations fail. The negotiations
may of course not fail, but it's still worth asking: in the event that
our military resources really did shrink significantly, how much damage
would that do to our national security? Here's my initial estimate:
zero. I mean, what actual threat to America's security is the military
currently fending off? Are there any countries that would invade the
United States if the Pentagon's budget were 10 percent smaller than it
is--which is roughly what $500 billion in cuts over 10 years would
amount to?” (12/7/12)
Washington Times: Sequestration spotlights real defense abuses– Col. Ken Allard (ret.)
“A panel of defense-industry executives
complained last week to a National Press Club audience about the defense
budget cuts known as sequestration. Calling those reductions
“irresponsible,” TASC CEO David Langstaff said sequestration would
shatter “our ability to execute U.S. national security strategy.” That
may well be the case. Yet on the same day, the Pentagon’s chief weapons
tester harshly criticized the Army’s costly data-mining system known as
the Defense Common Ground System (DCGS). Rather than smoothly producing
battlefield intelligence to hunt insurgents, even the new and
theoretically improved version of DCGS was ‘not operationally effective,
not operationally suitable and not operationally survivable against
cyberthreats,’ he said. Despite its ineffectiveness, the American
taxpayer has spent $2.5 billion on DCGS.” (12/7/12)
Foreign Policy: Flexible Spending Accounts – Gordon Adams
“Sequester is not about closing the
government; it's about cutting back on spending. If I were betting, the
impact will most likely be felt by services contractors (the lawn
service company) and by folks almost nobody is talking about -- the
civilian workforce at the Pentagon, some of whom could be taking an
involuntary day or two off, without pay. None of this will happen right
away. In fact, although OMB has not said what it will do if there is no
budget deal by January 3, one possibility is that it will use its
existing authority to tell agencies how fast they can spend their money
(apportionment) conveying to them the message: ‘Keep spending like you
were before. We'll get back to you on sequester when we know what
Congress is going to do.’ In other words, if OMB anticipates that
Congress might reach a deal sooner rather than later, sequestration
might be short-lived, even if there's no agreement by the January 3
deadline. So this is all contingency planning. The ball is still in
President Obama and Speaker Boehner's court. At least DOD may now have a
clearer view of the track ahead, just in case.” (12/7/12)
Government Executive: Defense IG was ‘flawed’ in criticism of audit agency, official says – Charles Clark
“The Pentagon inspector general’s recent
negative report on the revamped auditing priorities of the Defense
Contract Audit Agency has prompted a fresh rebuttal from a senior
Defense official familiar with DCAA. Last month, the IG reported that
DCAA’s two-year-old effort to review fewer contracts and focus on
high-dollar returns had missed an opportunity to save as much as $250
million a year, in part because the Office of Defense Procurement and
Acquisition Policy had not performed a ‘business case analysis’ to
support the decision to alter DCAA’s priorities in choosing contracts to
review. On Thursday, a key official, speaking to Government Executive
on condition of anonymity, argued that the IG’s ‘analysis is
fundamentally flawed’ and denied the charge that DCAA’s new approach
‘left money on the table.’” (12/7/12)
Center for American Progress: $100 Billion in Politically Feasible Defense Cuts for a Budget Deal– Lawrence Korb, Alex Rothman, Max Hoffman
“If carried out correctly, a well-managed
defense drawdown can return the Pentagon’s budget to more sustainable
levels without harming our national security or our economic recovery.
In this issue brief, we recommend $100 billion in responsible reductions
over 10 years as an initial target, a modest ‘down-payment’ that would
bring the defense budget back to its 2010 level in real terms. While
greater savings are both possible and, we would argue, necessary, this
brief outlines a menu of the most politically palatable cuts, widely
endorsed by organizations on both sides of the aisle, including the
Bowles-Simpson Deficit Commission, the Stimson Center/Peterson
Foundation, the office of Sen. Tom Coburn (R-OK), the Project on Defense
Alternatives, and the RAND Corporation.” (12/6/12)
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Reports
Government Accountability Office: DOD Financial Management: Actions Needed to Address Deficiencies in Controls over Army Active Duty Military Payroll (12/12/12)
Congressional Research Service: Department of Defense Energy Initiatives: Background and Issues for Congress (12/10/12)
Congressional Research Service: Navy Force Structure and Shipbuilding Plans: Background and Issues for Congress (12/10/12)
Congressional Research Service: Navy Ford (CVN-78) Class Aircraft Carrier Program: Background and Issues for Congress (12/10/12)
Congressional Research Service: Navy Ohio Replacement (SSBN[X]) Ballistic Missile Submarine Program: Background and Issues for Congress (12/10/12)
Congressional Budget Office: Monthly Budget Review (12/7/12)
Congressional Research Service: Iran’s Ballistic Missile and Space Launch Programs (12/6/12)
Congressional Research Service: In Brief: Next Steps in the War in Afghanistan? Issues for Congress (12/6/12)
Department of Defense: Report on Progress Toward Security and Stability in Afghanistan (December, 2012)
National Intelligence Council: Global Trends 2030: Alternative Worlds (December, 2012)
Government Accountability Office: Afghanistan Development: Agencies Could Benefit from a Shared and More Comprehensive Database on U.S. Efforts (11/7/12)
Department of Defense Inspector General: Semiannual Report to Congress (October, 2012)
Stimson Center: The Pentagon As a Pitchman: Perception and Reality of Public Diplomacy (September, 2012)
Government Accountability Office: The Federal Government’s Long-Term Fiscal Outlook: Fall 2012 Update