The Winners and Losers in Obama’s Defense Spending Request
The blade hasn’t fallen yet, but Defense Secretary Chuck Hagel raised the ax Monday when he offered a sneak peek of the Pentagon’s planned budget for next year.
The Pentagon is asking Congress for $496 billion, $45 billion less than it originally expected. Tucked inside that budget trimming are a host of winners—programs and priorities that the department kept safe from cuts—and losers who will not be spared.
Nothing in Hagel’s plan, however, is definite. Congress still pulls the purse strings, and the Pentagon’s fiscal 2015 request will undoubtedly be changed as members and defense lobbyists use their pull to protect their priorities—and try to shovel the spending pain to everyone else.
But it could be harder to get off the chopping block than to stay off of it. Here’s what got a head start Monday and what got left behind.
Special-operations forces: The military’s elite special-operations forces, which burgeoned after the Sept. 11, 2001, attacks and were at the forefront of the U.S. fight against al-Qaida, will increase from their current level of roughly 66,000 service members to 69,700. This is one key example of how the military, even in more austere times, is trying to protect, as Hagel put it, “capabilities uniquely suited to the most likely missions of the future.”
Military retirement funds: While the Pentagon is offering some modest reforms to military benefits, overall, Pentagon officials have sworn off making changes to the military retirement system in next year’s budget—even though they want to curb its rapid growth that threatens to usurp other key priorities in a downsized defense budget.
After the quick—and bipartisan—backlash in Congress to a provision in December’s budget agreement that cut approximately $6 billion in military pensions, Pentagon officials made it clear they would wait to propose major changes until a commission makes its recommendations in February.
Bases: Hagel is calling for another round of base closures that could take place in 2017. The Pentagon desperately wants to get rid of its excess military bases and facilities. However, especially in an election year, the bases may escape unscathed—and Hagel knows it. “I am mindful that Congress has not agreed to our BRAC requests of the last two years,” Hagel said.
Navy cruiser fleet: Half of the Navy’s cruiser fleet is going to be “laid up”—put in the shipyard—to be upgraded. This in some ways is a work-around, since the Navy has previously tried to decommission some cruisers, instead of providing expensive overhauls, but Congress refused. The Pentagon’s proposal is a more creative way to save some money short-term, since the ships will not be operating—but these 11 cruisers will “eventually” be returned “to service with greater capability and a longer lifespan.”
Cybersecurity: Cyber spending—from cybersecurity to intelligence gathering and reconnaissance—will get a boost. Hagel said last week that the Pentagon is “adjusting our asset base and our new technology.”
The whole budget: The Pentagon is requesting $496 billion to meet the budget caps Congress has mandated. Despite the Pentagon’s hopes that steep budget cuts would disappear, the budget agreement passed in December only gave the department a rather measly $9 billion in sequester relief for next year.
Still, in the hopes of funding some critical priorities, the Pentagon will submit an “Opportunity, Growth and Security Initiative.” This “wish list,” as it’s already been dubbed, will outline how it would spend $26 billion on top of its budget request.
This sets up a political free-for-all on Capitol Hill as members try to cherry-pick their priorities. And Hagel said it would be “paid for with a balanced package of spending and tax reforms” proposed in the rest of the president’s budget. We’ll see how that goes over.
The Army:Hagel’s budget calls for the Army to shrink dramatically, to its lowest force size since before World War II. The number of active-duty personnel will go down from a current 520,000 to as low as 440,000—a number roughly consistent with what Army Chief of Staff Gen. Raymond Odierno has said is needed for the Army to adequately respond to threats around the world. Still, even as the U.S. ends an era dominated by long wars in Iraq and Afghanistan, the Army was only preparing to downsize, from a wartime peak of 570,000, to 490,000.
This big “loser” in the Pentagon’s budget request could suffer even more if the budget cuts remain in place. “If sequestration-level cuts are re-imposed in 2016, the active-duty Army would have to draw down to an end strength of 420,000 soldiers,” Hagel said.
The active-duty forces aren’t the only division being rolled back in the budget request. The Army National Guard would draw down to 335,000 soldiers by 2017 from its current level of 355,000, and the Army Reserves would drop to 195,000 from 205,000.
European bases:The Pentagon is well-aware that closing military bases often leads to a losing fight with Congress. So it will pursue one loophole: closing European bases, which it can do even without congressional approval.
The department, Hagel said, will review—and pursue—recommendations to close bases in Europe. The department has cut its infrastructure in Europe by 30 percent since 2000, Hagel added.
Military compensation:The Pentagon is recommending a basic 1-percent pay raise for military personnel. The military’s top brass will see their pay frozen for one year—presumably in solidarity with more-junior service members. Future pay increases, Hagel said, will be “restrained, though raises will continue.”
Considering that the Pentagon desperately wants to curb the rapid growth of military compensation and benefits, you could view the relatively modest recommended reductions in this area as a “winner.” But the backlash from veterans groups—and many in Congress—will be quick and fierce. “Although these recommendations do not cut anyone’s pay, I realize they will be controversial,” Hagel acknowledged. This is why Hagel’s been meeting in person with these veterans groups. “I wanted to assure them that I want their input … but we’re going to proceed.”
Housing allowances: These relatively modest changes, in an era of budget pressure, could be considered “winners.” But for the interest groups—and those in the military who love this benefit—there will be some key changes as the Pentagon scales back the growth of its tax-free housing allowances. Currently, the military covers 100 percent of service members’ housing expenses, and will scale it back to covering on average only 95 percent—with the remaining 5 percent paid out of pocket. However, it’s important to remember, as Hagel said, that military members, on average, in the 1990s paid for 18 percent of their housing expenses.
Military grocery stores: The Pentagon is recommending slashing the direct subsidies currently provided to military commissaries, which provide groceries to military members, their families, and veterans at a discounted price. The $1.4 billion subsidy will be gradually reduced to $1 billion in the request—but the commissaries will still get free rent. The priorities will be to preserve commissaries more remotely located. Despite the cuts, Hagel said, “they will be able to continue to provide a very good deal to service members and retirees.”
Navy LCS ships: The Pentagon is directing the Navy to cut 20 of the littoral combat ships it was planning to buy, from 52 to 32 ships. Hagel is “concerned that the Navy is relying too heavily on the LCS to achieve its long-term goals for ship numbers.”
Instead, Hagel is pressing the military to “direct shipbuilding resources toward platforms that can operate in every region,” and figure out if the LCS is the right ship to perform in the Asia Pacific region—where the administration is trying to rebalance its diplomatic and military focus.
Air Force’s A-10 fleet: Hagel wants to cut the Air Force’s A-10 fleet, which would save $3.5 billion over five years. The A-10s, prized for their close air support capabilities, would have been replaced by the F-35 sometime in the early 2020s, Hagel noted, and this proposal simply speeds up that outcome. Though Hagel called the A-10 “a 40-year-old single-purpose airplane originally designed to kill enemy tanks on a Cold War battlefield,” don’t expect it to go down without a fight in Congress. New Hampshire Republican Sen. Kelly Ayotte, whose husband was an A-10 pilot, is leading the charge.
Army’s Ground Combat Vehicle: Hagel has accepted the Army’s recommendation to terminate the program—and has asked the Army and Marine Corps leadership to “deliver new, realistic visions for vehicle modernization by the end of this year.” While the decision was not exactly a surprise, it’s worth noting the Army once said the GCV was critical, and will instead buy a cheaper vehicle, likely an upgrade of the Bradley Fighting Vehicle.