2016 US Defense Budget Could Be $60B Over Spending Caps

Nov. 16, 2014 - By PAUL McLEARY – Defense News

WASHINGTON — As the White House and Pentagon pass drafts of the fiscal 2016 defense budget back and forth before submitting it to Congress early next year, the base budget request possibly could exceed congressionally mandated spending caps by as much as $60 billion, according to a former defense official with knowledge of the discussions.

Administration and defense officials have said for months that the 2011 Budget Control Act (BCA), which limits how much the Pentagon can spend, wouldn’t fully constrain the 2016 request. But a source with knowledge of a meeting between President Barack Obama and the Joint Chiefs of Staff said the chiefs have pushed for an increase of $60 billion over the $535 billion cap for defense, with another $10 billion for Department of Energy programs.

While the number might appear high, Pentagon and administration plans to push past the cap are no surprise.

On Nov. 6, Alan Estevez, principal deputy undersecretary of defense for acquisition, technology and logistics, told an audience at a procurement conference in Washington that “we’re going to propose a budget next January and it’s going to be above sequestration levels.”

Deputy Defense Secretary Bob Work recently estimated that the Pentagon would fall short about $70 billion in next year’s budget if Congress didn’t allow it to shift money around the way the building sees fit.

“If you add up all of the things that Congress told us no, after we submitted our budget, it’s $31 billion in noes,” Work said on Sept. 30. “No, you can’t get rid of the A-10. No, you can’t get rid of the U-2. No, you can’t get rid of those cruisers. No, no, no, no, no, no, no. And then, no, you can’t do the compensation reform.”

Add to this the billions that Pentagon officials now say will be needed to modernize the nuclear weapons programs, and the sequester caps give less and less room for issues like real compensation reform and starting expensive new programs, such as a long-range bomber.

Defense Secretary Chuck Hagel told reporters that billions of dollars in new investments are needed to fund critical nuclear upgrades in the coming years.

Hagel said the new investments would total “several” billion a year in the coming years, and that the Pentagon aims to spend at least 10 percent more each year for the next five years than it does on the nuclear upgrades and modernization programs.

The 2016 budget has long been looked at as something of a mile marker in Washington’s struggle to turn the page on more than a decade of inflated wartime budgets and massive supplemental requests that filled in the blanks in procurement and readiness accounts.

Still, there is tension.

“It’s clear that the Pentagon leadership is prepping the battlefield now with Congress for another cap-busting budget request that is likely higher than even last year,” said Mackenzie Eaglen, an analyst at the American Enterprise Institute.

But “the best the Pentagon is going to get is another Ryan-Murray deal” that offers short-term fixes to sequestration, she said, since there is likely little political appetite to actually do away with the law or offer a more permanent fix.

“It’s not a surprise if the base budget comes in at least $50 billion above the caps” set out in the BCA, Eaglen said.

Politics and legacy-building likely also play a role.

“You have the president putting out the last request that he will also execute the full year of, so that is an argument for seeing more money,” said Ryan Crotty, deputy director for defense budget analysis at the Center for Strategic and International Studies.

“But part of the politics of it is keeping the request at a level where it’s not going to be rejected out of hand” by a new Republican-controlled Congress in no mood to do the White House any favors, even if it supports a strong defense, and with its eye on dismantling big domestic programs like Obamacare. That same Congress will also be hostile to new taxes to make room for a rising defense budget.

Still, the amount of money the Hill will ultimately allow the Pentagon to keep will have to remain within limits.

Even the Congressional Budget Office, in a Nov. 6 report, estimated that given the modernization and compensation needs the Pentagon has laid out for upcoming years, the base budget requests between 2015 and 2019 will likely be $47 billion higher per year than the levels designated by the BCA.

But not everyone is convinced that these numbers will end up seeing the light of day.

“We’re not going to roll back sequestration entirely; we may get relief at the margin, but DoD is going to be living with lower budget resource levels than its plan of last year,” said Byron Callan, director at Capital Alpha Partners.