Strange Bedfellows: High-Stakes Poker and the Defense Budget

by Karl Van Deusen, Senior Vice President

Secretary of Defense Hagel took the familiar jingle “the best defense is a good offense” literally this month with his preemptive introduction of FY2015 defense budget details days before the Administration sent its budget plan to Congress. It was a rare move. Not a Joe Biden moment, but a surprise nonetheless. But it wasn’t going to be the last of DoD’s budget surprises for FY2015, in what is lining up to be a poker match with the Administration, the Pentagon and Capitol Hill all in.

As the ranks of old guard defense appropriators continue to thin, hawkish Members of Congress announce plans to retire and the overall percentage of Members of Congress with military experience at historical lows, we’re also seeing a parallel exodus among key defense professionals in the ranks of the Hill professional staff and contemporaries in the Pentagon. The Pentagon’s legendary Bob Hale, the longest serving DoD comptroller in over half a century, has called it quits with this, his last defense budget. These departures add yet another element of uncertainty to the budgetary process.

As expected, each player in this high-stakes game is holding his cards close. Following the Administration’s initial salvo, we’ll see if Congress is interested in calling their bluff, upping the ante or folding. There’s ample for reason for skepticism, when even the senior Democrat on the Defense appropriations subcommittee, Pete Visclosky (D-IN), announced that the current defense budget request unworkable. “It would be impossible for us to go to the floor with a placeholder for $79 billion,” Visclosky said, regarding the overseas contingency operations (OCO) request, and urged the Administration “to understand there’s some urgency with regard to the appropriations process.”

While it’s easy to infer a larger election-year political agenda behind the roll-out and composition of this year’s defense budget request, it’s fair to say the Administration is doing its level best to make lemonade out of lemons, i.e. stringent budget caps, sequestration and post-war Afghanistan. The unknowns created by these three big issues makes budgeting all but impossible to predict, and it’s unlikely either will be resolved in time to produce a meaningful defense budget given the compressed nature of this year’s legislative calendar.  (There are fewer than 69 legislative days remaining on the House calendar!) Not only is a defense appropriation bill at risk, but this could very well be the first time in 52 years that the National Defense Authorization Act isn’t enacted.

This year’s defense request is complicated by one known and two unknown elements. Going in, defense programs are strapped with a top-line spending cap of $496B. But the fiscal year defense plan (FYDP) shows out-year spending requests $115B in excess of the caps. Unknown at this point is the fate of the president’s Opportunity, Growth and Security Initiative, which includes proposals to lessen the sting of manpower reductions to the Army and Marine Corps, and the refueling of the aircraft carrier USS George Washington. The other unknown is an OCO placeholder, the details of which we’ve yet to see.

We also have the Quadrennial Defense Review (QDR). One could argue that this document, despite the thousands of man-hours it consumes within the Pentagon, never quite meets Congressional expectations. This go-round was no exception. Not only did the QDR fail to placate Democrats or Republicans, it announced fiscal influences could not be avoided in its drafting – a clear affront to the Congressional mandate of a strategy driven report. In fact, Rep. Buck McKeon (R-CA), chairman of the House Armed Services Committee (HASC) ridiculed the product as having, "…more to do with politics than policy and is of little value to decision-makers."

Lurking behind the curtains remains the specter of sequestration. Although partially avoided in 2014 and 2015, there is real concern that sidestepping it again in 2016 will be far more difficult. With little potential of gathering the requisite votes in Congress or receiving the backing of an Administration that sees the positive impact of fiscal austerity on the nation’s debt, HASC Chairman Buck McKeon acknowledged that, "Right now, looking forward, I don't see any possibility of overturning it."

Outside the beltway, the international environment is doing little to help defense planners deal with the pervasive uncertainty. Pundits point to historic drops in defense budgets following major conflicts. Isn’t it only fair for the Department of Defense to support a redistribution of a tight discretionary budget, after years of living on a big budgets? If only the current post-war security environment was as kind as its post-war predecessors. There’s no reshuffling of the cards we’ve been dealt and we are moving into likely shoal waters if we accept a relatively flat post-war defense budget to protect and secure our nation’s security against even a modest level of risk. From Syria to the Ukraine, Iran to North Korea, an uncertain China to emboldened Russia, cyber warfare to ballistic missiles and responding to inevitable humanitarian disaster relief to facing down the skyrocketing cost of military healthcare. It’s difficult to envision a near-term opportunity where the Administration can cash in even a modest number of defense chips.

So while it’s nearly inevitable that our Department of Defense will need to switch to a more low-fat fiscal diet, there seems to be a growing consensus that a crash diet is as unhealthy to politicians as it is dangerous to our warfighters.     

Betting on Congress to raise spending caps or repeal sequestration before 2016 is like hoping for that lucky card or two from the dealer to compete a flush; the odds are against it. Regardless, the Administration has made an interesting and unprecedented opening bid; we’ll see whether the fractured Congress will match it and call, up the ante, or simply fold.                           

Lisa Ellington

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