The Defense Budget Process

By Charles Kindleberger
PEP Board Member

This article was originally published in our 2016 edition of the Peace Economy News.

It is the summer of 2016, and once again the nation is engaged in resolving how much should be spent on the military, and for what. The process involves passage of a National Defense Authorization Act (H.R. 4904 and S. 2943), passage of a Defense Appropriations Act, and then approval by the President.

Differences between a bill passed by the House of Representatives and a bill passed by the Senate get resolved in a conference committee. This year 19 national non-profits have come together in order to recommend desirable modifications to the authorization bill for 2017. What was impressive is the fact that some of these groups are primarily conservative in nature, worried about the size of the Federal Budget; others are primarily concerned about the danger, as well as waste, of excessive weapons and an overly aggressive American foreign policy.

The 19 groups opposed:

• Shifting $18 billion from the Overseas Contingency Operation (OCO) fund, that many believe is a “slush fund” into the Base Defense Budget. Many view such a shift as an attempt to increase the defense budget that was set for two years by the 2015 Bi-Partisan Budget ($551.1 billion for the Base and $58.8 for the OCO).

• An artificial deadline (April 30, 2017) by which OCO funds would have to be spent. This “use it or loose it” policy would not lead to sensible expenditures.

• Expansion of the National Sea-Based Deterrence Fund by transferring $773 million in advance funding for replacement to the Ohio class submarine. Many fear that this would allow more resources for other Navy ship building which is currently responsible for submarines.

• A new study into the value of resuming production of the F-22, an option that was studied a few years back, and that the Air Force Secretary does not want.

The organizations also supported certain changes that should be made during the NDAA conference process:

• Establishing clear guidelines for the use of OCO funds so that they are used for “contingency operations” as originally contemplated, not as a slush fund.

• Requiring that cost estimates for research, production, and maintenance of the new B-21 bomber be regularly made to Congress and the public. Senator McCain and others have been very upset with the lack of details forth coming for this project.

• Continuing to fund progress on auditing the Department of Defense, a never ending process.

• Supporting the Senate version ($9.235 Billion) for the warhead in the proposed new nuclear armed cruise missile which is less than the House or President’s request.

• Less funding for the Joint Land Attack Cruise Missile Defense Elevated Netted Sensor System (JLENS), that is the blimp that broke free and drifted last summer. It is not clear that it works.

Defense Appropriation Act

This process has stalled. The House of Representatives has passed a bill, as has the Senate Subcommittee on Defense Appropriations.  However, in July several Democratic Filibusters prevented a full vote by the Senate. Reportedly the Democrats believe that a new bi-partisan agreement, comparable to the Senator Patty Murray-Representative Paul Ryan agreement in 2013 is necessary. They argue that this is the only way to fairly raise the Sequester caps so that they preserve the basic parity between defense spending and discretionary domestic spending (which is everything else after mandatory entitlement costs).

In the meantime, as evident in the chart maintained on the Friends Committee on National Legislation web site, many of proposed amendments that most PEP members would typically support have failed.

For example, the House Appropriation committee prohibited.

• Any funds being spent on President Obama’s Executive Order (13688) which would limit the donation of excess property to State and Local Law Enforcement agencies. For those who remember the excessive military equipment used in Ferguson this is discouraging.

• Funds being spent by the DOD to carry out its “green fuel” mandate. Republicans claim that there are currently almost 700 such projects, which collectively cost a lot more than would basic oil and gas.

• Funds being spent on planning or execution of Defense Base Closure and Realignment (BRAC), this despite the Military’s recognition that they have at least 20 percent excess base capacity.

• Funds being spent on the closing of the Guantanamo prison and/or transfer of prisoners to this country.

• Any attempts to limit the way in which Overseas Contingency Operations (OCO) are spent.

• Any attempts to deny the transfer of cluster bombs to Saudi Arabia which has reportedly used them in Yemen.

• Any attempts to implement DOD Directive 4715.2 which requires consideration of Climate Change implications. The current directive on Climate Change Adaption and Resilience is aimed at getting the Defense Department to consider Climate Change as part of all military planning activity.

The House of Representatives and the Senate see the world somewhat differently. The House Appropriations Bill would move some $18 Billion out of the Overseas Contingency Operation (OCO) fund, into the Base Defense Budget where it could be spent on House priorities. Instead the Senate would save $15 Billion by cutting around 450 specific cuts to the President’s budget. There is also disagreement over the size of the active duty force (1,281,900 – Senate version versus 1,310,615  – House version) and disagreement over the size of the pay increase (1.6 percent in the Senate version versus 2.1 percent in the House version).

Whether these matters get resolved in the coming weeks, or as part of an omnibus bill in the fall or winter, there can be little debate that $645 Billion is a huge amount of money – $587 Billion for the Base, and $58.6 Billion for the OCO. Not to mention another $12.9 billion for National Nuclear Security Administration in the Department of Energy. This is all money that could go to infrastructure, anti-poverty, research, health and so much more. Moreover, this annual level of military spending will not be enough to meet the long range wish list demanded by today’s military, industrial and congressional leaders.

Some of these expenditures may deter Russia, China and others who have exhibited assertive foreign policy. On the other hand we worry that the size and scope of the current and out year budgets will be perceived as provocative and aggressive. What a World!