Budget day; Odierno: no more free coins; Locklear encouraged to talk to the Chinese; Amos issues a challenge; How to crowd source national security; Did Hagel just lose “latte money?”; and a little more.

By Gordon Lubold

It’s budget day. Defense Secretary Chuck Hagel and Chairman of the Joint Chiefs of Staff Gen. Marty Dempsey will unveil a $526.6 billion defense budget for fiscal 2014 at 1 p.m. today that appears to be dead on arrival, as it does not reflect the spending caps imposed by sequestration. The budget release begins a contentious process that will keep uniforms and civilians as uncertain about the future as at any time in recent years. Some say the White House and the Pentagon are in denial about spending caps; others say the failure to recognize the likelihood of sequester left no time to trim and will instead force an overhaul of the massive defense budget.

From Reuters: "The White House budget plan proposes spending reductions and revenue increases that officials say would make defense cuts under a process known as sequestration unnecessary. But a deal on taxes and spending with the Congress seems unlikely, given that President Barack Obama, a Democrat, and the Republican-controlled House of Representatives have been trying for two years to achieve one. As a result, the Pentagon appears to be headed toward another round of forced budget cuts in October with no plan in place for absorbing the reductions, even as it struggles to implement a $41 billion budget cut for which it was ill-prepared."

AEI’s Mackenzie Eaglen to Reuters: "By ignoring sequester and hoping for a grand bargain that has remained elusive…Pentagon leaders are in for another year that looks like the one before it and the one before that, with no clarity in the short- or the long-term on budget or strategic matters."

Hagel and Dempsey will speak to reporters at 1:00. Then, Pentagon comptroller Bob Hale and Lt. Gen. Mark Ramsay, director of force structure, resources and assessment for the Joint Staff, will provide a more detailed briefing. Following that, individual services will brief reporters on the particulars of their budget proposals: Army at 3:15, Navy at 4:00; Air Force at 4:45.

Odierno, McHugh: the Army isn’t paying for any more challenge coins. It’s a sign of the budgetary times. At least for now, the Army will no longer pay for so-called challenge coins. In an April 1 memo obtained by Situation Report, Army Secretary John McHugh and Army Chief of Staff Gen. Ray Odierno informed the service the Army would no longer pay for the ubiquitous challenge coins. "The uncertain fiscal year 2013 funding caused by the combined effects of a possible year-long Continuing Resolution (CR) and sequestration, along with the need to protect funding for wartime operations, requires the Department to take all necessary measures to reduce spending of appropriate funds," the memo states. "Accordingly, the authority to purchase coins with operation and maintenance, Army (OMA) funds for presentation as awards/recognition devices…is temporarily suspended. Likewise, the authority to purchase coins with official representation funds for presentation as gifts to authorized guests…is temporarily suspended." But, the memo also says: "This temporary suspension does not prohibit the use of remaining stocks of coins for authorized purposes, nor does it prohibit the purchase of coins for presentation with personal funds."

Typically, senior officers give the coins to service members when visiting a base or to VIPs or others with whom they visit, and thousands of the coins are given away each year. They are a symbol of goodwill, and there is a long history of them being used as morale-building tools — but they can also cost as much as $10 apiece.

Welcome to Wednesday’s edition of Situation Report, where our challenge to you is to send us your best challenge coin stories. Sign up for Situation Report here or just e-mail us. And always, if you have a report, piece of news, or tidbit you want teased, send it to us early for maximum tease. If we can get it in, we will. And help us fill our candy dish: news of the military weird, strange trends, personnel comings-and-goings, and military stories of success or excess.

Chuck Hagel is worth as much as $6 million. The defense secretary did well in the private sector and is worth as much as $6 million, the WaPo’s Al Kamen reports. Many Cabinet secretaries — and the service secretaries and others inside the Pentagon — are relinquishing part of their salaries in solidarity with civilian workers who are expected to be furloughed for as many as 14 days. Kamen: "It’s worth noting, however, that some of President Obama’s Cabinet secretaries can more easily afford to participate in the phenomenon we’ve dubbed ‘sacrifice solidarity’ than others. For most, giving up a chunk of their nearly $200,000 annual pay amounts to little more than lost latte money. For a few, though, it’s a serious bit of cash relative to their bank-account balances."

"In the Loop" estimates the Cabinet’s net worth: Secretary of State Kerry: $184.2 million to $287.7 million; Attorney General Holder: $3.8 million to $8.4 million; Hagel: $2.8 million to $6 million; Shinseki: $2.2 million to $5.9 million; HUD Secretary Donovan: $1.5 million to $6.1 million; Agriculture Secretary Tom Vilsack, $1.2 million to $5.6 million; HHS Secretary Sebelius: $502,000 to $4.9 million.

Is it time for PACOM commander to reach out to China? Some senators think so. The crisis on the Korean Peninsula was front and center during yesterday’s hearing at the Senate Armed Services Committee, where senators like Republican Kelly Ayotte from New Hampshire suggested to Adm. Sam Locklear, commander of U.S. Pacific Command, that reaching out to North Korea’s ally, China, would be a good idea. "I think that is particularly important, given that North Korea relies on China essentially for its economic existence," the E-Ring’s Kevin Baron quoted her as saying. For his part, Locklear said he has not talked to his Chinese military counterparts during the ongoing standoff. Sen. Carl Levin, Democratic chairman of the SASC, was also curious about PACOM engagement with China as a way to reduce tensions with North Korea. Baron: "Locklear, who does not have a direct counterpart in the PLA chain-of-command, noted that Defense Secretary Chuck Hagel was having conversations with China on behalf of the Pentagon. Hagel discussed North Korea with Chinese Minister of National Defense General Chang Wanquan on April 2. Joint Chiefs Chairman Martin Dempsey spoke in early March with Gen. Fang Fenghui, chief of the General Staff of the People’s Liberation Army." Locklear:  "I believe that, over time, we’ll progress to a state where the PACOM commander can talk to the chief of defense or the chairman can talk there in a real time. We’re not there yet."

In the past, PACOM commanders have actively engaged the Chinese. Adm. Bill "Fox" Fallon was even accused of getting too close to the mysterious PLA in his attempt to put the military-to-military relationship on more solid ground.

State: No need to leave the ROK. The State Department told Americans living in South Korea — and there are as many as 200,000 — not to leave, the Cable’s Josh Rogin reports. At Tuesday’s State Department press briefing, reporters asked Spokesman Patrick Ventrell whether Pyongyang’s latest threat to Americans in South Korea would lead to a change in the
State Department’s advice to American citizens there, but Ventrell said it would not. Ventrell: "Our analysis remains the same as it was last week: that we’re not discouraging U.S. citizens from traveling to South Korea or encouraging them to take any special travel precautions," he said.

The Chinese love them some Jon Stewart — at least when he’s making fun of Kim Jong Un. Chinese viewers have clicked on Stewart’s riff on the North Korean leader 2.9 million times, making it show’s best-watched bit ever. Stewart goofs on "Little Miss Unshine," the Photoshopped pic distributed by the North Koreans of six landing craft arriving on a beach, and the leader sitting at an antiquated computer that Stewart said looks like a harpsichord with a panic button.  Writing on FP, Helen Gao says that "Despite some unfamiliarity with the cultural and political references in the segment, Stewart’s video was a hit. (People appear to especially like the Photoshopped picture of a statue of Kim Jong Un having sex with the Statue of Liberty.) Americans have long thought of the dictators in Pyongyang as bizarre and reckless demagogues, as crazy as they are dangerous. But now, it seems that the Chinese are coming around to a similar view — or at least one of annoyance with a former friend. One viewer commenting on the The Daily Show video nicely encapsulated the changing attitude toward North Korea: ‘Why is it inviting humiliation like this?’" Watch the Chinese version of Stewart’s bit, here.

Revealed! Exclusive photo of the North Korean air force. Making the rounds between State and DOD and agencies in between. But does Kim Jong Un have a fast pass? Check it out, here.

Oh, it’s awwwn now. Commandant Gen. Jim Amos is angry at the way the Gannett-owned Marine Corps Times recently characterized two female officers’ failure to complete the Infantry Officer’s Course, stating in an April 2 headline that they "flunked" the course. The general wrote a letter to the editor and challenged the paper’s reporter, Dan Lamothe, to complete the course himself, and Lamothe, a civilian who has covered the Marines for five years, has accepted. He is expected to begin the 13-week course later this year.

Amos, in his letter to MC Times: "That description is callous and irresponsible, and doesn’t do justice to these two fine officers. Of necessity, the IOC curriculum is extremely arduous and challenging. I have no plan of changing it. More than 30 percent of the lieutenants who attempt the IOC curriculum don’t complete it. Lieutenants who don’t pass IOC go on to serve our Corps honorably in other meaningful and rewarding ways." Then Amos handed Lamothe a military reporter’s dream: a chance to complete the course himself. Think daily blog posts, national media coverage, and the possibility that Lamothe, 31, could pass and maybe even excel.

So upset was Amos, that he also disinvited Lamothe and his managing editor, Andy deGrandpre, from an informal gathering at the Commandant’s home last night. Amos and his wife, top general officers, and a couple dozen military reporters, including Situation Report, were there. The MC Times story that caused all the problems, here.  The follow-up story about the challenge, here.

How you crowd-source national security. Who knew it but smartphones may be able to help track security agreements between nations in the not-so-distant future. Writing on FP, Christopher Stubbs and Sidney Drell suggest that the responsibility for verification – the process of ensuring that countries comply with treaties – could fall not only on nation’s spy satellites and other intel tools, but on smartphones. They write: "The increase in data volume, ever-improving connectivity, and the relentless evolution towards ubiquitous sensors in cell phones and other devices affords new opportunities for concerned citizens to participate in solving some of the thorniest health and security issues of our time. In the very near future, anyone with a cell phone will be able to serve as a weapons inspector.

Budgeting

• Dod Buzz: Obama seeks smaller defense cuts, budget likely DOA.
• USAT: No change seen in Army, Marine troop levels in budget.
• Truthout: Cut Social Security and veterans’ benefits? Cut the Pentagon instead.

Pivoting

• CNN: Northeast Asia on edge ahead of possible North Korean missile test.
• CS Monitor: To break cycle of threats, U.S. must put Kim on his heels.
• NPR (blog): "Very high" chance North will test fire missile.     

Noting

• BBC: Syria crisis: al-Nusra pledges allegiance to al-Qaida.
• Al Jazeera: France begins withdrawing troops from Mali.
• BBC: Mali to replace camel given to Hollande that was eaten by family.
• The Iran Primer: Where does nuclear diplomacy stand now?