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  • Debt Deals, Pentagon Reviews, and Lots of Questions
    Posted by Paul McLeary 2:53 PM on Aug 03, 2011

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    Despite yesterday’s raising of the nation’s debt ceiling and approval of deficit reductions, we still don’t know how much of a hit the defense budget will take when all is said and done. The White House Fact Sheet on the deal touts $350 billion in cuts to the base defense budget (known as function 050) over ten years, but that number doesn’t appear in the actual document passed by Congress. And the 12-member special Congressional committee, or Super Congress, tasked with hammering out the true size of the cuts by November in order to avoid an automatic $500 billion defense cut if no agreement can be reached won’t be named for another two weeks. Oh to be a fly on the wall of those discussions.

    In other words, the $350 billion is hardly etched in stone. At best, it’s a starting point for debate.

    Todd Harrison of the Center for Strategic and Budgetary Assessments says that it is his understanding that the $350 billion replaces the $400 billion in defense cuts spread out over twelve years president Obama called for in April, and that since the Pentagon has been working on a plan for how they would deal with the larger cut already, “this should dovetail nicely” with their plans. It’s also important to note that part of the overall defense cuts will include the departments of Homeland Security, Veterans Affairs, the National Nuclear Security Administration, the intelligence community management account, and the State Department’s budget function 150 (international affairs). Once all of those accounts are taken into consideration, Harrison says current estimates call for about $420 billion in cuts across the board over ten years. This entire base defense budget was $688.5 billion in fiscal year (FY) 2011, according to the Stimson Center's Budgeting for Foreign Affairs and Defense program.

    It’s not clear yet where the political will is going to be to decide what to cut, Harrison says. One way or another Congress is going to have to consider changes to some of the programs it hasn’t been willing to consider in the past like the Tricare health care system, or changes to the military retirement system, “maybe switching away from a pension system to a defined contribution plan like a 401(k),” he adds, “and quite frankly looking at serious changes in force structure.”

    This is going to be a huge issue for the Army in particular, and the incoming Chief of Staff, Gen. Raymond Odierno, told a Senate panel last month that since 40 percent of the Army’s budget is spent on personnel, the coming cuts will have to come at least in part “in force structure.” The plan, as it stands now, is to reduce the size of the Army from the current 569,400 active-duty soldiers by 49,000 starting in 2013, with 22,000 leaving by 2015, followed by another 27,000 once the first cut is complete. “The DoD’s just going to have to make trades between things like O&M [operations and maintenance,]” Harrison said, “and personnel costs, and things like acquisition funding.”

    Still, Stephen Daggett of the Congressional Research Service told me that he sees “pretty limited savings in personnel,” adding that “I think in the appropriations bill there will be a hack at O&M money, because Congress wants to protect money for guns and bombs, so there’s going to be pressure on readiness.”

    There’s a lot for the Super Congress to chew on here, and for the entire Congressional body to weigh this fall once they have to get serious about putting this entire package together. Adding to the din will be the Pentagon’s “comprehensive review” of its overall strategy scheduled to be completed in the September/October time frame. If you thought this summer was hot, just wait for the fall.

    Tags: budget, pentagon, congress, wellington, ar99

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