On February 13, 2012, President Obama rolled
out his $3.8 trillion budget plan. The election-year budget
proposes cuts to defense funding, but an increase in
education, highways and bridges, and manufacturing research
funding. It contains tax hikes on the wealthiest Americans and
corporations, sparking immediate push-back from Congressional
Republicans who have criticized the President’s budget as
overtly political in nature and aimed at pleasing key voting
blocs. The administration’s budget has almost no chance of
passing in its current form, and Congress will likely be
forced to pass a long-term continuing resolution.
The Department of Defense (DOD) budget request would
provide a total of $613.9 billion in funding. This includes
$525.4 billion in base discretionary funding, $6.3 billion in
mandatory funding, and $88.5 billion in Overseas Contingency
Operations (OCO) funding, mostly for the wars in Iraq and
Afghanistan. The base funding is $5.1 billion below the FY12
enacted funding. The OCO funding is $26.6 billion below the
FY12 enacted funding, mostly due to the withdrawal of combat
troops in Iraq. The budget request incorporates the $487
billion in defense spending cuts required by the Budget
Control Act (BCA) of 2011 until FY2021.
The administration’s FY2013 Navy budget request is
$155.9 billion, down from the $156.8 enacted budget in FY2012.
This represents a 5.4 percent cut from last year’s projected
FY2013 budget. Overall, the Navy fares better than the Army in
the proposed budget with regard to procurement. The overall
number of ships in the fleet declines, to 284 ships, but the
request maintains 11 aircraft carriers and maintains funding
for the Ford-class replacement carrier. Instead of cutting
carriers, the request delays several shipbuilding programs
over the five- year defense plan (FYDP), including one
Virginia-class attack submarine, one Joint High Speed Vessel
(JHSV), and delays work on the Ohio-class replacement
submarine (SSBNX). The Littoral Combat Ship (LCS) funding
remained flat.
The proposed FY2013 Army budget increases nominally
to $134.6 billion, up from $133.9 billion. However, Army
modernization and ground programs face significant cuts under
the administration’s proposed budget. The Army Wheeled
Tactical Vehicles, Tracked Combat Vehicles, and Helicopters
all saw steep cuts. The Army and Marine Corps. Joint Light
Tactical Vehicle (JLTV) is one of the few Army ground programs
that was not hit hard, and faces only a slight reduction under
the administration’s budget. The Army M1 Abrams tank also saw
only a slight reduction of about $2 million in FY2013.
The administration’s proposed budget cuts the Air
Force’s funding to $140.1 billion, from the FY2012 enacted
level of $144.9 billion, its third consecutive fiscal year of
decline. The Air Force plans to retire 38 C-27Js aircraft and
18 new Global Hawk Block 30 aircraft. These aircraft are some
of the newer planes in the Air Force’s inventory, and it would
be forced to rely on its older inventory. The decision to
retire some of the Air Force’s newer aircraft has come under
criticism from defense experts who argue that one of its
biggest challenges is the aging of its fleet.
Defense Committees Begin Budget Hearings
The Senate Armed Services Committee (SASC) and the
House Armed Services Committee (HASC) both held hearings on
the proposed budget this week, on Tuesday and Wednesday
respectively. Secretary of Defense Leon Panetta and General
Martin Dempsey, Chairman of the Joint Chiefs of Staff,
testified before the committees. Secretary Panetta told both
committees that Congress must do everything in its power to
avoid sequestration and said that the administration has not
made any plans to comply with the effects of sequestration
that are due for 2013. Panetta and Dempsey both agreed that
sequestration would be devastating for the military because it
is already absorbing more that $50 billion in cuts over the
next decade, as mandated by the Budget Control Act of 2011.
During the SASC hearing, General Dempsey said that
sequestration would force cuts to operations, maintenance and
training, resulting in a “hollow force.”
Secretary Panetta faced criticism from congressional
Republicans for the administration’s insistence that tax hikes
be included in any plan to roll back sequestration. Senator
John McCain (R-AZ) has proposed a bill to replace the
automatic cuts with reductions to the federal workforce, and
HASC Chairman Buck McKeon (R-CA) has introduced similar
legislation. Neither bill has gained traction in Congress and
Congressional Democrats immediately voiced their opposition to
the plans. President Obama has vowed to veto any legislation
that repeals sequestration but does not include tax hikes. In
the SASC hearing, Secretary Panetta warned that there is
“little room for modification” in the $614 billion budget
request, and stressed that the plan is a balanced package
based on the military’s strategic needs. He encouraged the
committee to review the proposal as a whole and not make ad
hoc cuts or other changes to the budget request. During the
hearings Secretary Panetta acknowledged that there are
inherent risks in any proposal that makes significant cuts to
DOD’s budget. One example he provided during the HASC hearing
is that it will be harder to deploy quickly with a smaller
force. He told the committee that when the defense budget is
cut by half a trillion dollars, there is very little margin
for error.
The House Appropriations subcommittee on defense also
held a hearing on the FY13 budget this Thursday. Secretary
Panetta and General Dempsey appeared before the committee and
were joined by DOD’s comptroller, the Undersecretary of
Defense, Robert Hale. Secretary Panetta reiterated his
assertion that sequestration will hollow out the military and
create serious national security concerns. However, he
announced his opposition to the legislation proposed by
Senator McCain and Chairman McKeon, saying that "I don't think
you should de-trigger sequester on the backs of our civilian
workforce”. Chairman McKeon said during Thursday’s hearing
that the chance of averting sequestration “doesn’t look good”.
Secretary Panetta told the committee “I don’t think it’s going
to happen. I don’t think Congress is going to allow it to
happen. But at the same time, the threat that it may happen is
something that’s having an impact.”
Next Week On Capitol Hill
The House and the Senate are in recess next week for
the President’s Day holiday and will return on Monday,
February 27th.
Quote of the
Week
“When you shave the budget by a half a trillion
dollars, it leaves very little margin for error,” Panetta told
the committee. And that, I think, is probably the biggest risk
of all.”
Defense Secretary Leon Panetta,
Testifying before the Senate Armed Services Committee on
2/14/12
For more information,
please contact:
Maj. Gen. Tony L. Corwin, USMC
(Ret.) – Corwin@BlankRome.com
Stephen
Peranich – Peranich@BlankRome.com
Pete
Giambastiani – Giambastiani@BlankRome.com
Kate Scontras - Scontras@BlankRome.com
Mike Stakias- Stakias@BlankRome.com