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Stopgap spending bill raises sequester specter at Pentagon

Automatic cuts triggered if Congress doesn't pass all 12 spending bills by Jan. 1 would fall hard on the Defense Department

Defense hawks are concerned by potential cuts to the Pentagon's fiscal 2024 budget.
Defense hawks are concerned by potential cuts to the Pentagon's fiscal 2024 budget. (Bill Clark/CQ Roll Call file photo)

With Congress poised to punt fiscal 2024 appropriations bills into the next calendar year, U.S. national security programs are bracing for the possibility they may net $82 billion less in the next two fiscal years than the amounts set by June’s bipartisan debt limit law.

That statute requires that funding for all departments and agencies — defense and nondefense — must be set 1 percent below fiscal 2023 levels in each of the next two fiscal years in the event that any of the 12 fiscal 2024 appropriations bills is not enacted by Jan. 1. 

As of now, it appears unlikely that any of the bills will be enacted by then.

For defense programs, an automatic cut, if it happens, would result in $36.5 billion in fiscal 2024 below the debt limit law’s cap and $45.43 billion less in fiscal 2025, according to a Congressional Research Service report updated last week.

The House easily passed a continuing resolution Tuesday that would keep government programs operating at current funding levels into next year — until late January or early February, depending on the department. 

The Senate is poised to clear that measure by the end of the week. Senate Majority Leader Charles E. Schumer, D-N.Y., said Tuesday the House measure is acceptable because it does not require funding cuts.

But cuts would come, including big ones at the Pentagon, if Congress fails to avert them between now and May. 

That sets up arguably the biggest single question facing Congress when the new year arrives.

The enforcement mechanism for the 1 percent cut, a sequester of funds, would not start until April 30. That gives Congress time to either enact all 12 funding bills or simply repeal the provision triggering the 1 percent cut. 

Optimists believe the prospect of cuts will motivate Congress to act. But others are not as sanguine, because neither of those two solutions is free from complications.

Rep. Mike D. Rogers, R-Ala., chairman of the House Armed Services Committee, said in a brief interview Tuesday that he was voting against the CR precisely because it sets up the prospect of a big reduction to planned defense programs. And he expressed little confidence that Congress would avert the cuts next year. 

“I don’t see what happens between Jan. 1 and April 30 that gets better,” he said. 

Rogers said many lawmakers believe they will solve the problem before April 30, but he said this reminds him of predictions that the so-called super committee would come up with ways to reduce spending in 2011 to stave off a significant sequester. They did not, and a decade of spending reductions followed.

“I heard that about the Budget Control Act, too, and it didn’t solve it,” Rogers said. “You know, if I saw things getting better around here, it’d be different. But I just don’t think that that happens.” 

Massie’s measure

The provision triggering the 1 percent cuts was written by Rep. Thomas Massie, R-Ky., and was intended to goad Congress into enacting spending bills at least before Jan. 1, if not by the Oct. 1 start of the fiscal year.  

The provision has not worked so far. Now Congress must deal with the consequences.

The soon-to-be enacted CRs “delay a major decision and debate Congress will need to take to avoid sequestration come April 30,” said Seamus Daniels, a defense budget fellow at the Center for Strategic and International Studies.

Rep. Tom Cole, R-Okla., a veteran member of the Appropriations and Rules panels, is among those who believe the pressure of looming defense cuts is likely to force members to enact new fiscal 2024 spending bills. 

“I promise you: No appropriator and no senator wants to have a year-long CR with a 1 percent cut, and that’s what happens if you don’t get to a deal by April,” Cole told reporters Nov. 7. “And they lose all their projects. It’s really bad for defense — $40 billion on defense — so I don’t want it either. But that’s where your leverage is.”

Defense initiatives were due a big raise in fiscal 2024 under the debt ceiling law — from about $859 billion in fiscal 2023 to $886.3 billion in fiscal 2024.

The reduction that the Massie provision would trigger would drop the defense allocation down to $849.8 billion.

If defense programs are still operating at the fiscal 2023 level of $859 billion, as they are now, the reduction to $849.8 billion will not be as severe — closer to a $9 billion cutback.

The worst-case scenario for the Pentagon would occur if all the defense-related spending bills are enacted into law but defense spending must still be scaled back simply because one or more nondefense bills has not yet been enacted.

But Democrats are likely to strongly resist permitting defense bills to become law while nondefense measures do not. As a result, the more likely outcome in that case could be a CR, perhaps for the rest of fiscal 2024, that covers all departments and agencies.

Complicating issues

Some factors would make the potential defense cuts harsher to enact, and some factors would make them easier. 

First, the law allows the cuts to occur in unobligated balances — money that has not been put on contract — possibly reducing the pressure on new programs. At last count, the Pentagon had $151 billion in such unspent funds from prior appropriations laws. 

It is not as though those funds are all unneeded, though. In many, if not most cases, they are slated for military priorities. For certain programs, the department has more than a year to spend funds. 

“Just because it’s unobligated doesn’t mean it hasn’t been allocated for something,” Daniels said. 

One element of the debt limit law could make automatic defense budget reductions fall harder on the Pentagon, especially for weapons contractors. The statute exempts military personnel compensation spending from the automatic cutbacks. That means they would fall on other categories of spending — namely budgets for paying civilian salaries, maintaining facilities and equipment, investing in new weapons to deter China and bolstering a munitions industry that has been stressed from the challenge of arming Ukraine.

Because the law allows exemption of personnel programs, the reduction below the budget ceiling law’s cap “turns out to be 5 percent instead of 1 percent” below fiscal 2023 levels, Rogers said. Daniels agreed.

What’s more, if the cuts have to occur on April 30, they will have to be apportioned with less than half the fiscal year left.

The first of a new set of fiscal deadlines is expected to come in January, as Congress stares down expiration dates in the CR.

Assuming one or more CRs have yet to be enacted at that point, the next showdown phase will come in the February through April time frame, as the looming cuts to planned defense spending draw ever closer. 

“There are paths out of it, and I hope they find a path,” Rogers said. “But that’s the law right now.”

Caroline Coudriet, Peter Cohn, Paul M. Krawzak and Aidan Quigley contributed to this report.

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