Administration officials for months have said that the defense budget request would act as though the $499 billion cap that the 2011 Budget Control Act (BCA) put in place had never happened. The 2016 request, therefore, would be $36 billion higher than the cap.
This week, the White House Office of Management and Budget (OMB) gave the Defense Department its "passback" budget guidance, which contained the higher base budget number, the source said.
The next round of passbacks is expected to happen around Dec. 19.
And it's not only the administration that is looking for more money. The Joint Chiefs of Staff — arguing that they cannot enforce the current national security strategy with the assets they have been provided — have requested an additional $32 billion in funding requests in the future years defense plan (FYDP), which covers 2017-2020.
The administration had already said that it wants $115 billion more than the BCA allows between 2016 and 2019. So these two requests would add $147 billion to defense budgets over the span of those years above what is allowed by law.
But in real, immediate terms, the $535 billion request "is the number that really matters," said Todd Harrison, a budget analyst at the Center for Strategic and Budgetary Assessments. "All of the future year projection is kind of pie in the sky and getting to the point where it's not even going to be the Obama administration that executes those budgets. So they can promise them that money in the out years but they won't be around to deliver on it."
Since the Murray-Ryan budget deal of December 2013, which eased budget caps for the 2014 and 2015 budgets, all eyes have been on the fiscal 2016 proposal, since that was supposedly to reflect the return to full sequestration.
The Obama administration will build the fiscal 2017 budget and begin putting together the 2018 request, but both of those budgets will be enacted by the next administration.
Harrison was also skeptical that the Pentagon would get that full $535 billion, since it is $36 billion above the BCA cap.
Still, asked on Dec. 4 if the $147 billion above the spending caps is something he might support, Sen. John McCain, the incoming head of the Senate Armed Services Committee, said "I think given the threats we face that's not an over-estimate. But we need much more careful scrutiny over these cost overruns."
McCain added that "there's nobody against sequestration more than me. But I go back to Arizona and I say, 'By the way, we built an aircraft carrier called the Gerald R. Ford. It had a $2.4 billion cost overrun — and there are still more cost overruns.' That is hard-for-me-to-justify defense spending. It's disgraceful."
Without that $115 billion in extra funding — now potentially $147 billion — defense leadership has said that it would have to reduce the purchase of one squadron of F-35 aircraft, eliminate the fleet of KC-10 tankers, reduce the number of ships in operation by seven in fiscal 2019 and cancel the procurement of eight ships across the FYDP.
The Army would also be forced to reduce troop numbers from 490,000 to 420,000.
But of that $32 billion that the Pentagon has identified, OMB has already found a home for about $12 billion in future years' budgets, the source said. Negotiations continue over the remaining $20 billion.
The Pentagon also sent its 2016 overseas contingency operations (OCO) request to OMB on Dec. 4, in which defense planners have started to move items out of the base budget back into the supplemental account, a practice that was common during the height of the wars in Iraq and Afghanistan, but which Congress and the White House have clamped down on in recent years.
Moving items into the supplemental account "offsets the effect of not getting as much in the base budget than they wanted," said Harrison, noting previous reports that said the Pentagon had wanted up to $60 billion above the spending caps in 2016. ■
John T. Bennett contributed to this report.