Appropriators Keep Defense Cuts Close to the Vest

Posted January 7, 2014 at 3:47pm

House and Senate Defense appropriators have been closely holding a secret, at the core of which lies the fate of hundreds of Pentagon programs facing billions of dollars in reductions from fiscal 2014 plans.

With the allocations for all 12 Appropriations subcommittees set to be revealed as early as this week, the Defense panels will soon reveal how they plan to cut their oversized spending bills to match the spending cap set by last month’s budget resolution (H J Res 59).

Working in secret, appropriators have been racing to finalize a compromise $1.012 trillion omnibus before the government runs out of money Jan. 15. Senate Appropriations Chairwoman Barbara A. Mikulski, D-Md., said Tuesday that the panels have agreed on the compromise Defense and Military Construction-VA spending measures, but they won’t meet their goal of finalizing an overall deal and sharing it with Senate and House leaders by Wednesday.

Some of the tradeoffs will be painful for lawmakers. Appropriators need to reduce total defense-related spending by about $25.4 billion from the levels in House-passed bills, and $31.7 billion from the levels in the companion Senate measures.

Slightly less than 95 percent of the $520.5 billion in defense spending for fiscal 2014, resides with the Defense subcommittees, or somewhere in the neighborhood of $490 billion, according to senior congressional aides. While an enormous amount of money by any standard, that figure would still be $22 billion less than the House voted for the defense spending bill (HR 2397) earlier this year.

“I know our defense guys were not happy,” a House GOP lawmaker said of the defense spending reductions. “It’s tough on Rodney [Frelinghuysen, R-N.J., the new chairman of the Defense Appropriations panel] to walk into this situation. It was unavoidable. If you were to keep the overall number low, you are going to have to do some things.”

The lawmaker, who wished to remain anonymous because of a gag order placed on lawmakers and staffers as they work through the complex package, noted that leaders plan to mount a “blitzkrieg” to push the bill through while limiting opposition from lawmakers and lobbyists alike.

Most of the work is complete and there were “a lot of negotiations over the holidays, none of the cardinals know much beyond their own top line and issues in their field,” the lawmaker said. “The minute it spills beyond the Appropriations committee, it makes problems within the conference.”

‘Real Money’

Nowhere is the pressure greater than in Defense, which touches virtually every congressional district either directly or indirectly.

After running drills for months, panel staff are expected to use a scalpel, rather than an ax, to find the reductions needed.

One senior House aide and a senior Senate Appropriations aide suggested the easiest place to find reductions would be in operations and maintenance accounts.

Further, “there is usually money to pull out of personnel and health, just due to chronic under-execution,” the Senate aide said. “For us — we put it all on the table and see where we can get to by doing the least amount of damage.”

The aide added, “A lot of time, we end up cutting 500 to 600 (or more) separate line items in small amounts that eventually add up to real money. That’s something that no one really seems to grasp.”

Still, others suggested the panel would prefer not hitting the operations and maintenance accounts too hard because the military already faces significant readiness challenges after the fiscal 2013 sequestration.

Jim Dyer, who worked as a GOP staffer on the House Appropriations Committee for 26 years, said he would not rule out cutting operations and maintenance funding entirely, because it is the spending account with the greatest flexibility and the smallest constituency base in the Pentagon, on Capitol Hill and in industry.

“I’m not dismissive of doing that again, because it works and because these readiness accounts are important and cash flow varies and they can move money around,” Dyer said.

Because the war-fighting funds are separate from the base defense budget, the Appropriations panels may attempt to offload some base-budget money into the war-related Overseas Contingency Operations account.

This has been successfully done in prior years in an effort to alleviate the strain on the budget as resources for defense have declined, Dyer said.

He stressed that because personnel and benefits are consuming a greater portion of the budget and there is no great willingness on Capitol Hill to target those accounts, particularly after the budget agreement already cut retiree pensions, lawmakers would be forced to turn to research and development and modernization accounts.

The downside there, Dyer said, is that there are a host of multiyear procurement programs that could be undermined by cuts. Further, each of those programs has influential constituencies that likely would resist cuts.

“Congress has repeatedly forced on the Pentagon more and better multiyear advanced planning activities, so when you rip the stuffing out of these accounts, you are not doing yourself any favors,” Dyer said. “They would be walking away from what they have tried to get them to do for a long time.”

Dyer said appropriators likely would look at troubled programs to find savings. Further, they may seek to delay programs on the drawing board, and possibly end others.

“I wouldn’t rule out terminations,” he said.

Lobbyists Stand Back

Several defense lobbyists said there would have been little to gain by scrambling to influence the panel’s choices.

One longtime lobbyist noted that with Congress facing such a tight deadline, the committees did their “conference at lightning speed.” The lobbyist emphasized that at this late date, “a lot of this is out of our control. Staff has no time to deal with industry and lobbyists.”

Indeed, “we are not as active as we ordinarily would be. Mostly we use email or personal offices asking to intercede for us,” the lobbyist continued.

Many lobbyists are busy reassuring clients that they have spent all year laying groundwork to defend key priorities.

But in the face of an extraordinary gag order, little information is available.

Indeed, House Appropriations Chairman Harold Rogers, R-Ky., waited until this week to share with his subcommittee chairmen and ranking members the allocations each of their colleagues have been given.

“Leadership did not want to run the risk of a second shutdown or [continuing resolution] crisis,” the GOP lawmaker said.

Tamar Hallerman contributed to this report.