Facing Cuts, Defense Department Bemoans Inflexibility

Posted March 5, 2013 at 5:16pm

Flexibility. That’s what the military says it needs to better manage the budgetary havoc it’s facing amid steep and sudden reductions to its accounts, but that’s precisely what it doesn’t have.

After a decade of historic wartime boosts to its coffers, the Pentagon is facing a double whammy that takes much of the decision-making out of the hands of department leaders.

The $46 billion in sequester cuts that went into effect last week must be applied indiscriminately to every military account, except for military personnel. That would only be magnified by a simple extension of the current continuing resolution, which expires March 27.

Both constrain the department’s ability to decide for itself which areas of the budget to cut, leaving the Pentagon unable to set new priorities as it begins a post-war drawdown in spending.

“Leadership in the Pentagon, all of us, have two serious concerns: first, the abrupt and arbitrary cuts imposed by sequester; and second, the lack of budget management flexibility that we now face under the continuing resolution,” Defense Secretary Chuck Hagel told reporters at the Pentagon last week.

Lawmakers might end up giving the Pentagon some relief, but Defense officials face a tough battle to get the full flexibility they would prefer.

With the sequester now a reality for the Defense Department and the rest of the federal government, House appropriators offered a plan Monday to deal with at least one of the Pentagon’s fiscal problems.

Unlike most other agencies, which would continue to operate under a stopgap continuing resolution, under the House bill the Defense Department would get a full fiscal 2013 spending bill, with $518.1 billion for the base budget, $10.6 billion for military construction and another $87.2 billion in war money.

That means the department could sign contracts for new programs — something that is forbidden under a CR — and that defense dollars would be targeted, more or less, in the right places.

The total defense spending level under the current CR, which funds the government mostly at last year’s levels, isn’t an issue. The problem is the distribution of the dollars, with some programs receiving an unwanted spike in spending at the expense of more urgent priorities, namely the military’s operations and maintenance accounts. Those accounts would receive $10.4 billion more from a spending measure than they would under an extension of the continuing resolution.

In short, the bill (HR 933) would “allow the Pentagon some leeway to do its best with the funding it has,” House Appropriations Chairman Harold Rogers, R-Ky., said in a statement Monday.

The House bill, however, does very little to help the department manage the across-the-board sequester cuts.

Rogers’ legislation doesn’t give the Defense Department any new authority to move money within its own accounts. The Pentagon would be allowed to transfer up to $4 billion between its various accounts, the standard authority it has enjoyed in recent years.

Meanwhile, the explanatory statement accompanying the House measure reiterates that cuts to research and procurement accounts must be administered to the “most specific level of budget items,” rather than giving the department some flexibility to set its own cost-cutting priorities and target some programs more heavily than others.

That runs counter to a GOP proposal offered by Senate Armed Services ranking member James M. Inhofe of Oklahoma that would give the department wide latitude to apply the cuts. It’s a move that some senators argued would give the administration too much power to control spending, while Democrats portrayed it as an attempt to put the blame for specific cuts on President Barack Obama. Inhofe failed to get enough votes for cloture on the measure (S 16) last week.

“Appropriators are not giving up their prerogatives,” said Russell Rumbaugh, a national security budget analyst at the Stimson Center and a former staffer on the Senate Budget Committee. The Rogers bill “isn’t the Inhofe bill, do as you wish.”

Rogers’ bill, however, does contain language that gives the Defense Department greater freedom in applying the cuts within its operations and maintenance account, essentially codifying what many believed to be the Pentagon’s own interpretation of the sequester cuts. Indeed, Deputy Defense Secretary Ashton B. Carter has said the department will prioritize operations and maintenance funding in the war accounts at the expense of stateside operations.

“We are not curbing or withholding in any way training from units that are going to Afghanistan,” Carter said on March 1. “What that means, though, is that the burden falls more heavily upon the rest” of the force.

Even in its domestic operations, the department would be able to decide among priorities in its operations and maintenance account, the most fungible portion of the defense budget. That account is a broad swath of funding that covers training, exercises, education, maintenance at bases and civilian pay.

“Mowing the lawn is not the equivalent of training off a carrier,” former Pentagon Comptroller Dov Zakheim said.

Extending that kind of flexible approach allowed in the operations and maintenance account to procurement and research and development would be the best option for the military in the absence of a deficit reduction deal, Zakheim said.

But with the Inhofe bill dead in the Senate and no consensus on how best to avert the brunt of the sequester cuts, it appears that the Defense Department’s best hope for dealing with at least one of its budgetary problems could be the House appropriators’ bill.

Senate Democrats, however, have not been warm to the House appropriators’ plan, saying that nondefense agencies need some relief from CR and sequester too.

Alan K. Ota contributed to this report.