With the administration's release of its 2016 defense budget request, there are a few key questions we will be looking to have answered. Some of those will be addressed over the next few days and weeks, as analysts pore over the Department of Defense's justification materials in detail. Others are likely to be answered only later this year, as the congressional budget process unfolds.
- DoD base budget topline priorities: Where will any increased spending be allocated?
As has been widely reported, the administration's 2016 budget request is likely to exceed the Budget Control Act (BCA) post-sequester caps by a wide margin. The base budget submission is reportedly about $34 billion, or about 7 percent above the BCA caps.
The odds are low the administration and Congress will reach a grand bargain this year that increases the defense cap to accommodate that figure. It will be difficult to agree to a deal that provides even modest relief. So the increases included in the 2016 request should be taken with a large grain of salt.
Nevertheless, how the added funding is allocated will tell us something about Pentagon priorities. Will the new plan simply reflect the same priorities projected in last year's plan, or will it focus on buying back more force structure? More modernization? Or more realistic funding levels for operations and support activities?
- The other DoD budget: What will happen to overseas contingency operations (OCO) funding.
In putting together the 2016 request, the administration was in a stronger position than usual to resist DoD pressure to provide budgetary relief by covering additional enduring (i.e., base budget) activities through OCO — given the large increase to be included in the base budget request. Moreover, the administration has a clear incentive to keep OCO funding relatively disciplined in the 2016 request to help pressure the Republican Congress to approve a deal that would lift both the defense and non-defense discretionary funding caps. These two considerations suggest that the administration's OCO request for 2016, reportedly some $51 billion, is unlikely to include any further expansion of the "OCO criteria." On the other hand, this marks a decline of only some $12 billion, compared to a nearly $23 billion cut in 2015, suggesting that there was no major contraction of those criteria either.
A key question to be answered later this year is whether Congress will attempt to do what the administration is seeking to avoid: use OCO to provide relief for the DoD base budget.
Given the difficulty of reaching a deal raising the defense cap even modestly in 2016, a plus-up to the administration's OCO request may offer an attractive option. But if this approach includes more than a relatively modest increase, it could make even some Republican members of Congress uncomfortable and face a presidential veto.
- *Funding the "offset" strategy: Will DoD significantly bump S&T spending?
Last year, DoD leadership outlined a plan to increase its investments in a set of technology areas key to "offsetting" the challenges posed by increasingly technologically sophisticated competitors. It has cited robotics, advanced computing, 3D printing, big data analytics and miniaturization as areas at the heart of the "offset" strategy.
Thus, another key question is how DoD will show progress on this strategy in 2016 (e.g., in its science and technology budget), since, by its nature, it could take years to develop mature, operationally effective technologies.
- *Budget endgame: Will DoD effectively communicate its core priorities?
Last year, the administration asked for $26 billion above the caps for both defense and non-defense discretionary funding. But this addition was included in the "Opportunity, Growth, and Security Initiative (OGSI)," and was distinguishable from the rest of the request, which remained consistent with the caps. This led to criticism and confusion. Was the OGSI part of the real request, or a relatively meaningless wish list of lower-priority programs? The administration's 2016 approach will likely not distinguish between below-the-cap and above-the-cap requests.
In this case, how will the Pentagon communicate its core priorities (and not simply concede great latitude to Congress) if it becomes clear that the cap on defense may not be raised, at least not substantially? And how will the Republican Congress navigate this same dilemma? Marking to the caps would be difficult, but marking to a much higher topline that may seem increasingly less likely could be similarly problematic.
- *Winners and losers.
Once the 2016 budget request is released, we will dig deeply across the thousands of line items in the Defense Department's request to see who the winners and losers are, identify any significant changes in long-term trends, and highlight those areas in which Congress is likely to be supportive or raise particular concerns.
But answers to the four key questions noted above will go far toward framing, shaping and, in some cases, even determining the meaningfulness and relevance of the mass of detail that will make up that request.
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Doug Berenson is managing director of Avascent Analytics, and Steven Kosiak is a partner at ISM Strategies and former associate director for defense and international affairs at the Office of Management and Budget.