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DoD Budget: Expect Big Changes In Five-Year Spending Priorities

Mar. 9, 2014 - 03:45AM   |  
By MARCUS WEISGERBER   |   Comments
Defense Secretary Hagel And Chairman Of Joint Chie
US Defense Secretary Chuck Hagel, right, and Army Gen. Martin Dempsey, the chairman of the Joint Chiefs of Staff, testify March 5 during a Senate Armed Services Committee hearing on Capitol Hill in Washington. The committee heard testimony on President Barack Obama's defense budget proposal for fiscal 2015. (Getty Images)
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WASHINGTON — Just before Maj. Gen. Jim Martin, the US Air Force budget director, walked into the Pentagon briefing room on March 4, an aide slipped him a note.

The paper said that if a reporter asked about the future of the service’s Combat Rescue Helicopter (CRH) program, say that Air Force Secretary Deborah Lee James just made the decision to keep the program alive. Thirty-four minutes into his briefing on the 2015 budget proposal, in which CRH wasn’t mentioned, the question came.

Martin responded: “Breaking news, we have made a decision to fund the CRH.”

Reporters shot their hands into the air. Others blurted out questions. Two hustled out of the room to file their story.

It was an unprecedented break from the time-tested and thoroughly regimented briefings of the past. Decisions about funding or not funding multibillion-dollar procurement programs are typically finalized well in advance of such an important briefing. That’s not to mention that in a briefing by Pentagon Comptroller Robert Hale earlier that afternoon, it was revealed that the CRH program would be delayed.

The bizarre moment summed up an odd two weeks in which the Defense Department struggled to explain its complicated 2015 budget proposal, sent to Congress on March 4.Reporters, budget analysts and lawmakers and their staffs were all left scratching their heads. It became clear as the week progressed that there would still be revisions to the Pentagon’s plans.

“I think there’s a disconnect between the public comments and the budget documents, and I’ll leave it at that,” Sen. Carl Levin, D-Mich., chairman of the Senate Armed Services Committee, said March 5.

Gordon Adams, a professor at American University who ran defense budgeting during the Clinton administration put it this way: “The mind boggles here because it’s made really getting your arms around what they’re doing tremendously hard.”

The Pentagon built its $496 billion fiscal 2015 proposal so that it would not exceed federal spending caps that are in place for later years. This was after it took strong criticism for proposing, at White House direction, budgets billions of dollars above these caps in 2013 and 2014.

DoD also built its five-year projections in the proposal to fall in line with the spending cuts. But earlier this year, late in the budget process, White House officials told DoD to plan for an additional $115 billion in excess of spending caps from 2016 to 2019.

Christine Fox, the acting deputy defense secretary, warned last month that the Pentagon’s 2015 budget proposal was complicated. It was an understatement.

“I think that if we tried harder, we couldn’t have made this budget more complicated,” Fox said at a Feb. 26 event at the American Enterprise Institute. “It is very hard to explain. There are actually multiple budgets embedded in this submission.”

Fox noted how this budget “has sort of two budgets in it.”

Actually three. The proposal includes the $496 billion base budget request; a separate $26 billion Obama administration request for training, logistics and equipment; and an Afghanistan war budget, which has not been submitted since US troop levels post-2014 are still up in the air.

“It does make it confusing,” Hale told Defense News when asked about the many parts of the budget proposal. “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.”

'Abbott and Costello'

One of the most confounding aspects of the 2015 submission is that DoD’s five-year projections — known as the future years defense plan (FYDP) — do not include funding for what senior officials say are the department’s top priorities: halting planned Army force reductions at 440,000 troops; stopping planned Marine Corps cuts at 182,000; and maintaining a fleet of 11 aircraft carriers.

The FYDP — even with the extra $115 billion — instead plans to bring the Army down to 420,000 soldiers, lowering the Marine Corps to 175,000 and retiring one aircraft carrier.

“So the FYDP is not real,” Adams said . “Abbott and Costello couldn’t have done it better.”

DoD’s FYDP projections, which have not yet been released and could come this week, instead align the money with other priorities, including modernization of weapons and readiness, according to sources. After the White House approved the extra cash, DoD put it toward modernization and readiness, not toward troop increases or the carrier. Obama administration officials then directed DoD not to cut the troops and the carrier, these sources said. But DoD was unable to realign its FYDP projections in time.

A week before the budget was released, Defense Secretary Chuck Hagel said maintaining the higher levels was DoD’s goal, but Congress would need to remove or raise defense spending caps to make it happen.

Defense officials say they do not need to decide on the troop levels and the aircraft carrier until the 2016 budget, so it’s prudent for them to start planning for a worst-case scenario now, particularly since DoD has been highly criticized for not planning budgets in line with spending caps for several years.

“These are hard things to plan,” Hale said. “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.”

A senior Army official said the reason the end-strength numbers are not included in the DoD’s long-term planning is because the White House gave the Pentagon the OK to plan for budgets that busted spending caps “very late” in the budgeting process. He said those higher numbers will be included in DoD’s 2016 budget plan.

“The decisions on force levels inside the FYDP in the president’s budget were made very late in the cycle, and so the FYDP does not reflect those. So during the development of [program objective memorandum] ’16, all of those accounts will need to be re-looked and rebalanced,” said Army Brig. Gen. John Ferrari, deputy director, program analysis, Army G-8.

“So we did get — late in the game — the president came with his additional top line above sequester, so when that came in and then there were decisions to do that and the mechanics in preparing all that, the force levels were left at the sequester level because we’ve got time to come back and fix that over the next couple years,” Ferrari said.

'We Can Do This.'

Defense officials say they have “off-ramps” that would lessen the end-strength reductions and fund the carrier refueling, should Congress repeal sequestration or at least raise the spending caps.

If DoD gets assurances that sequestration will go away, “We know where the off-ramps are,” Fox said.

But DoD would need to adjust its FYDP plan to accommodate the extra troops and the carrier.

“We’ve got time to make those adjustments,” Hagel told the Senate Armed Services Committee on March 5. “I understand the confusion on how we did it and why we did it.”

Sources said DoD would have to realign around $15 billion to make that happen.

“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 [operations and maintenance],” Hale said. “I believe we can do it.”

Asked about the $15 billion figure, Hale said: “All we have are real rough planning figures. Fifteen [billion] is one of them. It could be higher or lower.” ■

Vago Muradian and Paul McLeary in Washington contributed to this report.

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