NEW YORK — Several leading defense analysts have little confidence in the ability of Congress to produce another Murray-Ryan type budget deal that would partially stave off the effects of sequestration in the fiscal year 2016 budget and beyond.
The 2013 deal forged between Senate Budget Committee Cchairman Patty Murray, D-Wash., (D-WA) and House Budget Committee Cchairman Paul Ryan, R-Wis., (R-WI) came partially as a result of a years-long relationship and debate between the two lawmakers – — a relationship that no longer exists between the heads of the budget committees.
"In the Ryan/Murray deal there was precedent in the relationship to make that deal possible," Mackenzie Eaglen of the American Enterprise Institute said during a presentation at a Bank of America-sponsored conference here on WednesdayJan 7. "This does not exist anymore … I don't know if we will see a [Murray-Ryan] 2.0."
The new Senate Budget Committee Cchairman Republican Mike Enzi is and Rranking Mmember Independent Bernie Sanders — an independent who caucuses with the Democrats — both have both made statements that show a willingness to further squeeze the defense budget in order to fund other social programs or simply streamline government operations.
Speaking at thea Bank of America-sponsored defense conference in Manhattan, N.Y., Eaglen pointed out that by this time in 2013 — Murray-Ryan/Murrary was passed in December of that year –– "there was already a deal framework in place, and now there's not even a discussion that a deal is needed."
One of the issues with the new Republican-controlled 114Congress, which was that was sworn in Tuesday, on Jan. 6 is that the majority of members have assumed office during the Obama administration, Eaglen said, so they have cut their political teeth trying to block the president's initiatives.
"It is a party that is very young and very green when it comes to defense … that that doesn't bode well for the Pentagon" in the coming years.
But even in an era of budget caps and sequestration, many analysts feel that there is still plenty of funding for the Pentagon and industry to get projects done.
"There's enough money in the system overall to fund competitive solutions … the issue is how you allocate those funds in a constrained environment," said Jeffrey Bialos, a partner at Sutherland, Asbill & Brennan LLC and former deputy undersecretary of defense for industrial affairs in the Clinton administration. "There's enough money for us to do what we need to do and for industry to prosper."
But the record quarterly profits that the big prime defense contractors have posted the past few years often appear at odds with the cries of fiscal disaster from the Pentagon.
That disconnect, said Todd Harrison a senior fellow at the Center for Strategic and Budgetary Assessments, "is that industry saw this coming, and industry did what it needed to do to prepare. Cutting people, closing facilities, and getting more efficient … industry is reaping the benefits now."
But the share buybacks and cost cutting measures that the defense industry has used to return value to its shareholders can't last forever. "It's a somewhat temporary benefit," Harrison warned, because "you can only get more efficient and downsize to a certain point until it starts to hurt you."