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U.S. Spending Bills Suddenly Irrelevant

Aug. 6, 2012 - 11:14AM   |  
By KATE BRANNEN   |   Comments
The Pentagon will be affected by U.S. congressional leaders' decision to pass a six-month-long stopgap spending measure, as opposed to fresh appropriations bills for fiscal 2013, that would keep funding at 2012 levels until the end of March.
The Pentagon will be affected by U.S. congressional leaders’ decision to pass a six-month-long stopgap spending measure, as opposed to fresh appropriations bills for fiscal 2013, that would keep funding at 2012 levels until the end of March. (Defense Department)
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Rather than try to pass appropriations bills for fiscal 2013, U.S. congressional leaders have decided instead to pass a six-month-long stopgap spending measure that would keep funding at 2012 levels until the end of March.

This is bad news for defense companies and Pentagon officials who track the defense appropriations bills, trying to understand what they can expect for funding in the upcoming fiscal year.

While the Senate Appropriations Committee passed a $604.5 billion defense bill Aug. 2, with an accompanying report of hundreds of pages of budget details, the spending bill offers little insight into next year’s budget landscape.

The potential six-month stopgap measure, plus looming automatic spending cuts, mean House and Senate appropriators are being stripped of much of their influence over the Pentagon’s budget.

First, automatic spending cuts, including $54 billion extra from the Pentagon in 2013, loom over the government. Unless Congress can come up with an alternative way to reduce the deficit, the cuts will begin Jan. 2 under a process known as sequestration.

If sequestration is allowed to happen, the work the Obama administration did in crafting the 2013 budget, and the adjustments made by the appropriators during mark-up sessions, would be wiped out.

However, sequestration is not the only thing threatening to undo appropriators’ work.

On July 31, the Senate majority leader, Sen. Harry Reid, D-Nev., and House Speaker John Boehner, R-Ohio, announced an agreement that would extend government funding for six months and avoid a government shutdown on Oct. 1, when fiscal 2013 begins.

The agreement, known as a continuing resolution (CR), continues government spending at 2012 levels.

While Congress is not expected to vote on a bill until September, when lawmakers return from their August recess, the White House has indicated it supports the measure.

Republicans and Democrats are banking on the fact that by the end of March, when the CR would run out, they’ll be better positioned to get what they want out of a budget deal due to November’s election results.

Political leaders also want to see it pass because it will mean there is one less thing for them to deal with in the lame-duck session of Congress, which begins after the election.

Disadvantages of CR

However, while the leaders who reached the agreement hailed it as a positive development, defense watchers see no reason for optimism.

“It is very bad for defense,” one defense lobbyist said.

For example, with a CR, no new starts are allowed. And money, until it’s reprogrammed, is inefficiently allocated under a CR, with some programs getting more than they need and others falling short.

Defense programs rarely require the exact same amount of funding from year to year, as weapon programs move from development into production and eventually into sustainment. However, under a CR, no progress is allowed, the lobbyist said.

Others thought the appropriations bills could serve as a vehicle for attaching legislation that might undo or delay sequestration before the lame-duck session, when there are a host of other divisive issues to tackle.

Instead, a “CR continues all the uncertainties that have industry and government in limbo,” said Arnold Punaro, a retired U.S. Marine Corps major general, former Senate Armed Services Committee staffer and current member of the Pentagon’s Defense Business Board.

“While some may brag about a CR, it means once again Congress did not meet their obligations to pass appropriations bills, and this is not in any way good news or good government or good for defense,” Punaro said.

For appropriators in the House and Senate, it is particularly bad news, as it renders their work useless.

The full House passed a $605.8 billion defense spending bill in July.

The chairman of the House Appropriations defense subcommittee, Rep. C.W. Bill Young, R-Fla., left an Aug. 1 meeting with House leaders looking downtrodden, according to the defense lobbyist. Young said he did not expect a defense spending bill for 2013 at all.

Instead, he said he thought there would be a second six-month CR passed when the current one runs out at the end of March.

His frustration is understandable.

A CR strips appropriators of their authority, said Todd Harrison, a defense budget expert at the Center for Strategic and Budgetary Assessments. The appropriators are no longer going through the budget, program by program, providing oversight. Their ability to approve new programs also is removed through a CR.

“It abdicates a lot of decision-making,” Harrison said. But it does not transfer that decision-making to the executive branch; it merely delays any decisions from being made.

Defense Appropriations

To meet the Budget Control Act’s caps for defense spending, the Senate Appropriations defense subcommittee transferred $5 billion out of the Pentagon’s base budget into a separate spending bill for operations in Afghanistan.

The subcommittee recommends $511 billion for DoD’s base budget and $93 billion for overseas contingency operations (OCO), for a total of $604.5 billion. The Pentagon requested $88 billion in OCO funding.

When asked where the extra OCO money came from, an aide to Sen. Daniel Inouye, D-Hawaii, chairman of the Senate Appropriations Committee, said the money had been transferred from one bill to the other to keep the base budget within the budget law’s new spending caps. The Pentagon’s contingency funds are exempt from the federal discretionary spending caps.

The panel looked to transfer anything it considered to be war-related, she said.

This is the first of the 2013 defense bills that stays within the Budget Control Act’s spending caps, including the president’s request.

Funding for the Pentagon this year is nearly $29 billion less than was appropriated in 2012, primarily due to the drawdown of forces in Afghanistan, Inouye said.

The $511 billion does not include military construction or nuclear weapons programs managed by the Department of Energy, which are included in separate appropriations bills.

Within the top line, the Senate panel made several adjustments to the Pentagon’s spending request, including 475 reductions to programs requested in the budget.

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