The House proposal to keep defense spending down is a big deal -- and a reality check for the Pentagon.
Earlier this week, the House Appropriations Committee introduced a continuing resolution to prevent a government shutdown, which assumes there will be no final agreement on a budget or on appropriations bills before the end of the fiscal year on Sept. 30. The House bill provides discretionary government funding through Dec. 15, or the first two-and-a-half months of FY 2014. The committee decided that, rather than give either the president or Rep. Paul Ryan what he asked for, it would get real: fund defense and the rest of the government at roughly the same level for the next three months as they have been funded for the past year. In other words, fund them at the post-sequestration level. My colleague Russell Rumbaugh calls this "a huge deal."
The resolution — which is now being contested within the Republican majority in the House — has yet to be voted on. But it confirms an ongoing message: Defense budgets are going down, sequester or no sequester. If the Pentagon cannot count on more money from the Republican House than it got after the sequester this year, there is no "get well" point in the visible future. Trust me, the "defending defense" crowd isn’t going to be any happier when the Senate takes its stand on a continuing resolution. It is time for the Pentagon to think about how to manage with funds that are no more than what the Budget Control Act projected over the next 10 years.
If sequester kicks in again in January because there is no budget deal (a distinct possibility, given the absence of any progress in talks on the overall budget this summer), the level of funding provided by the House Appropriations Committee bill will fall another $20 billion. The Department of Defense managed to survive, quite handily, the $37 billion it lost through sequestration in FY 2013. Given the flexibility the Pentagon has to manage sequester — for example, a flexible operations and maintenance account, large internal reprogramming authority, and fungibility between the base budget for operations and the "war" budget — it can handle another $20 billion in FY 2014, probably without more furloughs and, frankly, without severe damage to military readiness.
But it will take work and more advance planning than the Pentagon has engaged in so far. There are lots of places to get this planning going. The budget request for FY 2015, now in its final stages, is one place to accommodate realities in the future. The Quadrennial Defense Review (QDR) now underway, with a report due in February, is also a good place to acknowledge what the great strategic thinker, Bernard Brodie, said way back in 1959: "Strategy wears a dollar sign." If the QDR does not take place in a context that is fully informed by budget constraints, it will be a failure and irrelevant to the choices that need to be made as the budget declines. The independent panel that was appointed to review the QDR from the outside (co-chaired by former Secretary of Defense Bill Perry and retired General John Abizaid) had better be a resource-aware enterprise, too.
There are two other commissions that are increasingly relevant to where the Pentagon should be going spending-wise. One is the panel on headquarters reductions that Secretary of Defense Chuck Hagel appointed last month, chaired by former Air Force Secretary Michael Donley. It is supposed to look at how the DOD will implement a 20-percent reduction in headquarters staff that the secretary announced in July. (Over five years — to which I say: Let’s move faster.) That’s a good start, but the panel’s mission is too narrow. It should be digging into the entire DOD "back office," the 42 percent of the defense budget that is overhead, 70 percent of which is in the services — not just into the secretary’s office, military commands, or headquarters.
The other panel is the one looking at military pay and retirement, chaired by Al Maldon, Jr., who is a former DOD official and a founding partner of the Washington Nationals. The panel needs to hit one out of the park when it reports on Nov. 1; pay and benefits, including health care, have doubled per active-duty troop over the past decade. This is a touchy issue in the defense world, full of political landmines. But it needs to be addressed. (The Center for Strategic and International Studies group working on trade-offs in future defense planning has been saying this for a couple of years.)
If the Pentagon does not do long-term planning that tackles the "back office" and the pay and benefit issues, the budgetary drawdown over the next decade will not end well, in terms of meeting the nation’s needs. Secretary Hagel and Deputy Secretary Ashton Carter need to step in aggressively to ensure future planning is not just business as usual — that is, spreading the cuts in a "chunky peanut butter" way that keeps the services and the politicians happy but does not actually close the gap between plans and resources. Their leadership and legacy are at stake here, and they need to intervene in a way that may not always make the services happy, but that promises to protect what the services are here to do: provide the agile and capable force the nation can call upon to support its statecraft.