Outgoing Pentagon Comptroller Robert Hale last week unveiled his final Pentagon budget plan, and soon will retire. He leaves behind what he calls “uncertainty” with further across-the-board cuts pending via sequestration. Hale oversaw a 2015 budget process that has left many in Washington and the defense sector confused. For instance, the future years defense plan (FYDP) is incomplete, with senior officials sending conflicting messages last week about just how the $115 billion it calls for above spending caps etched into law would be spent.
Hale sat down with Defense News on March 6, saying that if Congress opts against raising the caps to give the military the extra $115 billion it wants through 2019, drastic and controversial moves will be implemented. That list includes taking an aircraft carrier out of the fleet, Hale said. It also would force ground-force cuts, trimming the Army to 420,000 active-duty soldiers and the Marine Corps to 175,000 members. There appears to be little support on Capitol Hill for those moves, but as Hale said, all indications are that lawmakers will keep the spending caps in place for fiscal 2016.
Q. One of the things that Defense Secretary Chuck Hagel said is that he wanted to minimize the impact on troop reductions. He said that if the Pentagon got this extra $115 billion across the five-year budget that it wanted, those were the priorities that it would try to underwrite. And then the budget released didn’t have any of those priorities. Why not fund those priorities?
A. Well, let me start by saying that in 2015, the only thing for which Congress will appropriate money, we have fully funded our preferred priorities. The Army, it’ll be around 490,000 [soldiers], well above 440,000 to 450,000 in ’15. The Marine Corps, 182,000. There’s enough money in there to preserve our options to maintain 11 carriers and 10 wings. So in some ways, I think, this whole issue of disconnect is a bit of a mountain out of a molehill and may even obscure the important debate over the broader budget.
But let me try to answer your question. We don’t know what Congress is going to do. We face massive uncertainty. [Congress] could appropriate at the sequester level, a reasonable chance they could, I hope, appropriate at the $115 billion above. For a few categories, we felt we needed the time to plan and so we hedged, if you will, from a planning standpoint.
If we judge, and we have some indication that Congress is going to appropriate at those higher levels, we will reverse those and stay at our preferred levels. We’ll stay at 11 carriers. We’ll leave the Army at 440,000 to 450,000. That will require that we look again at our five-year plan, probably do some trims and procurement, maybe some in O&M [operations and maintenance], but protect the most readiness-related parts of O&M and find the funds to preserve that force structure.
Q. We understood that you originally built a budget to full sequester level, but the White House gave you a little bit more money and you put it not against people, but against readiness and modernization. But when those plans were presented to the White House, they told you to keep higher force numbers and the 11th carrier. Is that why the five-year budget plan has been delayed?
A. We had extensive discussions with the White House and OMB [Office of Management and Budget] over a wide variety of issues, to include the ones that you’ve mentioned. But I’ll say, we reached accommodations with them and are in agreement with them. Secretary Hagel is fully comfortable with this plan, and so is the White House. It’s part of the president’s budget. But the reason that we left those few categories — Army end strength, Marine Corps end strength and the carrier, I would call it prudent planning. We need to get started. These are hard things to plan. You don’t decommission a carrier without a fair amount of planning.
And the reason we left them in there is to give ourselves time and maybe even force ourselves to plan because we may have to do it.
Q. When are we going to see the five-year budget plan? Has that been delayed as you reworked the plan?
A. No, it’s not delayed. We send it up about a month after, it’s classified. The details are classified. Now we’ve given out a lot of it and we’ll continue to provide summaries of it.
Q. When you look to buy back those troops and to buy back the carrier and to make the changes to the plan that you’ve already built, how much money are you talking about, specifically? We hear the number is about $15 billion.
A. We’ll make the decisions in what we call the [program objective memorandum] ’16 process, which is already started in the services, but it will get serious [in the] late summer and fall. All we have are real rough planning figures. Fifteen [billion] is one of them. It could be higher or lower. That’s over the five years. I think it leads me to believe and my colleagues that we can do this if we want to make some trims in other procurement plans and some, hopefully, non-readiness-related O&M. I believe we can do it.
Q. Last year, you asked for about $80 billion for overseas contingency operations (OCO). This year, you have a $79 billion placeholder that’s applied to it. At what point are you going to know how much money you’re going to need in this critical drawdown year in Afghanistan?
A. We asked for $79 [billion]. Congress actually appropriated $85 billion [for 2014]. The placeholder is based on last year’s request. We won’t know until conditions permit the president to make a decision on the enduring presence. After that happens, we need probably at least two months to put together a remarkably complex budget, bigger than most federal agencies other than defense. So we’re probably a ways out from having a formal budget amendment.
Q. You did a study looking at what are base budget items that have been moved into OCO and vice versa. We hear that $34.7 billion was the number. What are you doing to move as much of those base budget items that exist in the supplemental into the base budget?
A. Well, this is a problem. I mean, there is some money in there. I think that $34.7 billion sounds way high. But I’m not prepared to give you a number. And the reason I’m not is I don’t know what forces are coming out. And some of the forces that are in Afghanistan may be taken out of the force. So even though some of their depot maintenance and training money is in OCO, we may not need to have those funds back in the base budget. But it’s not trivial, and it is an issue we need to confront.
Q. This is one of the most confusing rollouts that we’ve seen. And even in your testimony up on Capitol Hill, there were lawmakers who were scratching their heads. Why is it so confusing?
A. We have one budget, as always. But there are alternatives that we’re presenting. For example, in fiscal ’15, we have a budget at $496 billion, but there’s the Opportunity, Growth and Security Initiative — a government-wide initiative. We’re asking for an extra $26 billion. In the out years, we have one budget, but it’s above the sequester levels and we promised the Congress that we’ll tell them what happens at the sequester levels so there’s kind of an alternative there. It does make it confusing.
I think we can explain it. We need a little more time. It may take more than one briefing. But I believe we can get beyond it, at least, I certainly hope so. And then we can have a debate over the real priorities in this budget.
Q. The Opportunity, Growth and Security Initiative includes $26 billion for you in ’15. What does it mean, how do you get it, and where does that money come from?
A. First off, we’re budgeting at $496 billion, which is consistent with the cap. So it’s the Murray-Ryan deal. That’s the formal budget. But along with the formal budget, OMB has submitted — and if you look in the tables of the budget, you’ll see it identified separately — is added dollars for the Opportunity, Growth and Security Initiative; $56 overall, $26 [billion] for us. Just briefly, about 40 percent goes for readiness, near-term readiness enhancements, about 40 percent for modernization, about 10 to 20 percent for base sustainment.
OMB’s got the lead here in terms of next steps. But in order to appropriate those funds, Congress will have to modify the Budget Control Act caps and raise them for us by $26 billion, and presumably analogously, for other agencies. You know, I don’t have the sense they’re inclined to do that. I hope so, because we strongly support it. We need the readiness dollars. It would mitigate near-term readiness risk. But I think it may be a long shot.
Q. On pay and benefits reform, that’s something that is critical to your budget. But that’s an emotional issue, and there are a lot of members who oppose it. There was a modest cost of living adjustment cut, but that was immediately rescinded by Congress. What case can you make to Congress to drive members to reconsider?
A. The way we like to put this is, we’re trying to free up money to provide training and maintenance. And there’s a quality of life aspect that the pay takes care of. There’s a quality of service aspect, that we want to have these people well-trained and well-equipped if they have to go into harm’s way. So that’s the main reason we’re doing this. We are committed to sustaining the all-volunteer force. And we have benchmarks that suggest that we could modestly slow the growth in compensation and still recruit and retain enough really high-quality people, even though it’s a very demanding profession.
I’ve said before and I’ll say again: If we’re wrong and we’ve gone too far, we’ll fix it. And certainly, Congress will be willing to let us raise pay.
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