by Shaun McDougall, Forecast International.
U.S. House Republicans have proposed an FY16 budget plan that would allow the Pentagon to sidestep sequestration spending caps by adding $39 billion to the Overseas Contingency Operations account. There are aspects of the budget plan that will upset both Democrats and Republican deficit hawks, however, meaning the proposed blueprint is essentially dead-on-arrival.
The president’s budget request includes $561 billion for national security programs, comprising $534.3 billion for the Pentagon’s base budget, $19.1 billion for defense programs in the Department of Energy, and $7.6 billion for defense-related programs in other agencies. The request also includes $50.9 billion for OCO, meaning the budget contains a total of $611.9 billion for national security programs. The Budget Control Act caps national security spending at $523 billion in FY16, with the Department of Defense base budget capped at $499 billion. Because OCO funding is not subject to the caps, the president’s request comes in at $38 billion above the caps for all national security programs, and $35 billion above the caps for the Pentagon budget alone.
Pentagon
The new House budget proposal, released by Budget Committee Chairman Rep. Tom Price (R-Ga.), maintains the BCA’s $523 billion cap for national security spending in FY16, but increases the war coffer to $90 billion to provide relief for the military. Of course much of that extra money would likely be divvied up among various priorities that have no direct connection to the war effort. Deficit hawks already view the OCO account as a slush fund, containing billions of dollars that should be moved to the base budget. Throwing another $39 billion into the account in a blatant effort to bypass sequestration won’t sit well with that camp. Senate Armed Services Committee Chairman Sen. John McCain (R-Ariz.) has already deemed the plan a gimmick.
The GOP budget proposal also leaves in place spending caps for non-defense discretionary programs in FY16, and reduces that domestic funding in FY17 and beyond. Throw in a lack of tax reforms and a provision to repeal the Affordable Care Act, or Obamacare, and it’s clear the proposal won’t gain traction on the other side of the aisle. Senate Budget Committee Ranking Member Sen. Bernie Sanders (I-Vt.) has already said Senate Democrats will not support a budget plan that provides sequestration relief for the Pentagon while ignoring non-defense programs.
There is clearly support in Congress to amend sequestration caps. Both the Senate and House Armed Services Committees have urged their colleagues on the budget committees to provide $577 billion for national security in FY16, the amount that would be provided if sequestration was lifted completely. HASC Chairman Rep. Mac Thornberry (R-Tex.) said if that figure wasn’t feasible, then Congress should provide a minimum of $566 billion in FY16. Meanwhile, a group of 70 pro-defense Republicans recently sent a letter to House Speaker John Boehner (R-Ohio) saying they will vote against any budget that comes in under the $561 billion for national security contained in the president’s budget request.
The problem is that lawmakers simply can’t agree on how to get rid of sequestration. Earlier this month, the leaders of the House Appropriations Defense subcommittee told military officials to prepare for an FY16 budget that adheres to sequestration caps. “I completely agree that the BCA needs to be modified to avoid dramatic, immediate and long-term negative impacts on our military capabilities,” said HAC-D Chairman Rep. Rodney Frelinghuysen (R-N.J.). “But unless and until the law is changed, this committee has no choice but to draft our bill to comply with the BCA caps,” he warned. The top Democrat on the panel, Rep. Pete Visclosky (Ind.), said there are “insurmountable obstacles blocking every path forward” when it comes to repealing sequestration cuts.
The Senate Budget Committee is expected to release its own budget resolution this week, though only time will tell if that chamber can clear a more traversable path for the defense budget. For the time being, the situation remains extremely murky.
For 50 years, Forecast International intelligence reports have been the aerospace and defense industry standard for accurate research, analysis, and projections. Our experienced analysts compile, evaluate, and present accurate data for decision makers. FI's market research reports offer concise analysis of individual programs and identify market opportunities. Each report includes a program overview, detailed statistics, recent developments and a competitive analysis, culminating in production forecasts spanning 10 or 15 years. Let our market intelligence reports be a key part of reducing uncertainties and mastering your specific market and its growth potential. Find out more at www.forecastinternational.com
