Wednesday, February 20, 2013

Countdown to Cuts

Two budget events are scheduled in March that are confusing messages about potential cuts to defense.  Sequestration is followed three weeks later by the end of the current funding resolution.
On March 1, sequestration is automatically scheduled to arbitrarily cut as much as $43 billion from the Pentagon's budget this year.  On March 27, the funding authorization for the existing continuing resolution (CR) runs out.  Congress is confronted with the challenge of resolving both financial conundrums before time runs out.

All the Armed Services are publicizing the effect of budget defense cuts on their portion of ensuring national security.  Not only are public relations events, such as the Air Force’s precision flight team - the Thunderbirds, having their schedules cut, but deployments and weapons systems are being put on hold. A nuclear Navy aircraft carrier needing refueling is being taken out of the deployment rotation.  The Marines have already curtailed levels of depot repair, training exercises, and equipment purchases.  The Army has threatened to delay training for 80 percent of its Brigade Combat Teams, terminate critical maintenance, and curtain training new aviators and intelligence analysts.  The Air Force is considering cutting flying hours by 18 percent.

Sequestration doesn’t just affect those serving in the military. As many as 800,000 civilian Defense Department employees will be furloughed up to 22 days for the remainder of the fiscal year, Secretary of Defense Leon Panetta said in a statement.

Speaking to reporters on a trip into Afghanistan, General Martin Dempsey, chairman of the Joint Chiefs of Staff, said about a third of the cuts would have to come from forces, with the remaining two-thirds taken from spending on modernization, compensation and readiness.

Among the talking points being used by the services is how “sequestration will have devastating effects on our readiness, modernization, and the workforce.”  The main emphasis by each armed service is how budget reductions will cut into operations and maintenance, leaving the nation less secure.

Reading between the lines, DoD will be a push to reduce personnel benefits for both Active, Reserve and retirees.  Secretary Leon Panetta has already suggested limiting a military pay in FY 2014 raise to just one percent.  Members of both political parties are considering changing how the calculations of the cost of living allowance for retirees and disabled veterans can be changed to reduce expenditures.

During Congressional hearings, many DoD leaders have testified to how personnel costs are “eating up” the defense budget, but these expenses are a needed investment to recruit and maintain a volunteer force.  With the war winding down, many in Washington D.C. on both sides of the Potomac no longer want to pay that bill.

While family support programs are supposedly protected, the Army has warned about reductions to the Soldier Family Assistant Center, the Army Substance Abuse Program, the Sexual Harassment/Assault Response and Prevention Program. Additionally, cuts to state-side commissaries, base exchanges and Morale, Welfare and Recreation facilities are being considered.
When the President’s budget is released in mid-March it is anticipated that TRICARE fee increases will again be requested.   His budget will also address any national security strategy changes and will recommend changes in force structure and personnel end strengths.  In the past, many of these recommendations were budget driven.

A number of conservative members of Congress are now favoring sequestration, figuring it may be the only way to reduce non-defense spending that has grown at a faster rate than the defense budget.
House Armed Services Committee Chairman Buck McKeon, R-Calif., told Politico on Jan. 23, “I’m pretty sure it [sequestration] is going to happen now.”  Chairman McKeon has been warning Congress about sequestration. Congressional leadership is now suggesting that any solution to sequestration will not be before the end of March.

Adding to the confusion though is funding the government using a continuing resolution.  Statements from the armed services about cuts mix the impact of sequestration with the effects of the CR.  An example of this intertwining is a statement by the Chief of Naval Operations, Adm. Jonathan Greenert, in which he says that the Navy is feeling the blows of sequestration and the continuing resolution as it works to counteract an $8.6 billion shortfall in operations and maintenance.
In his interview General Dempsey did the same thing shifting between sequestration and the CR.  "The continuing resolution under which we're operating has more money in the investment account and less money in operations and maintenance and we don't have transfer authority to move it," Dempsey said. "So our operations and maintenance is deteriorating because of the misalignment of funding in the continuing resolution."

Under the continuing resolution budget, the Navy will cancel availability for modernization or maintenance for over 23 ships.  The Army has had its 2013 budget cut by $6.1 billion from operations and maintenance funding. The Marine Corps has reduced the fuel, ammunition, and other support necessary for training, reducing precluding USMC ability to provide fully trained individuals and ready units to meet emerging crises.

While military personnel funding is excluded from sequestration action but not from the continuing resolution.

If Congress follows its usual pattern, no FY 2013 budget will be introduced, with a CR being suggested for the remainder of the fiscal year.  Year-long continuing resolutions have been passed for the last two years, forcing numerous federal agencies into austere budgets.

A third budgeting dynamic is that the services must still cover the costs of Overseas Contingency Operations (OCO) in Afghanistan, and other special operations.  The Administration has been shifting more OCO funding from wartime budgeting to the baseline budget.  The Air Force indicates that their OCO shortfall is $1.8 billion; the Army has to cover between $ 5 to $7 billion.

President Barack Obama proposed a short-term budget plan to further delay sequestration’s devastating cuts into later in the year.  This will provide ROA members a chance to discuss the continuing resolution and sequestration with your members of Congress on March 20, when ROA members “march” on Capitol Hill. Your presence is needed.

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