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Budget Insanity: America's Self-Inflicted Defense Drama

September 9, 2015 Topic: Politics Region: United States Tags: CongressBudgetDefense

Budget Insanity: America's Self-Inflicted Defense Drama

The old adage says that insanity is doing the same thing a second time and expecting a different result. Why can’t we avoid marching off another budgetary cliff?

As Congress and the President return to town, Washington is sleepwalking towards another budgetary showdown that could result in sharp cuts in defense and other government spending or even another government shutdown.  At a time when the nation has real crises and other urgent, weighty matters to consider—from the Iran nuclear deal to the fraying ceasefire in Ukraine to the upcoming visit of President Xi of China and climate change—we do not need a self-inflicted wound.

To be sure, everyone is aware that the federal government may be headed for the brink. But few seem to think it within their power to step back. As things stand, the Budget Control Act of 2011 will sharply limit defense funding—reducing FY 2016 funding by about $34 billion compared to the President’s request, coming on top of a several years of decline in defense accounts—unless a new law is passed to soften the constraints. The law also limits non-defense spending. The Murray-Ryan compromise of 2013 has now run its course and no longer will apply to the 2016 budget year, which begins October 1. Without the added $34 billion, the Department of Defense will not be able to improve military readiness and modernize adequately to produce the force it needs in a world populated by ISIL, a mercurial North Korea armed with nuclear weapons, a Russia enamored of adventurism, an assertive Iran, a rising China, and more.

Moreover, spending at the level of the budget cap may be the lesser of our problems if there is no budget at all—at which point another government shutdown would occur.  Or, we could have a year-long continuing resolution, which in Defense means funding at the same rate as in FY 2015 in some 50 separate accounts. A year-long continuing resolution, which steers the budgetary ship by its wake, is a bad fiscal strategy because it puts dollars in the wrong pots, prevents new programs from being launched or restricts their growth, and generally causes budgetary mischief.

So far neither party seems willing to put politics second and the nation’s interest first with regard to solving broad budget issues. There is a forum for resolving these issues. We have a national-level election campaign now beginning, for the presidency and all of the House and one-third of the Senate as well as many state offices, and that is the place to argue the merits of long-term budget choices. Soon, one party or the other will have claim to at least a partial mandate. Will the nation’s top new priorities include stronger defenses, big new education initiatives, tax reform, or pursuit of a major green revolution? These and other choices are being framed by candidates, as they should be. We will know the American people’s mind soon enough.

Meanwhile, the likely harm from making a mountain out of a molehill in this fall’s budgetary fight is larger than many realize. We are on the verge of repeating our mistakes from two years ago.  Just at the Department of Defense, that year’s budgetary shenanigans caused numerous serious problems including:

- Waste of about $400 million of taypayer dollars as 350,000 civil servants were directed not to work during the government shutdown but then were paid anyway by a Congress that tacitly acknowledged the civilian employees were not at fault;

- An Army that reduced by half the brigades sent to culminating training exercises at the service’s national training centers and an Air Force that stopped flying for several months nearly one quarter of its operational squadrons. These actions resulted in a military less ready for a major national contingency than it should be, a scary outcome in such an uncertain world.  If we fund defense at sequester levels next year, the specifics of the training problems would be different but no less real;

- A reluctance to expand multi-year purchases of weapons, even though the multi-year approach can reduce costs by 10 percent or more. Multi-year contracts commit the Department to large out-year costs, a tough decision when budget trends are so uncertain.

- Just as seriously, and underappreciated, a drop in employee morale at the Department of Defense and other federal agencies—especially among civilians who have recently suffered through back-to-back furloughs and three years of pay freezes. Another government shutdown, which would lead to yet another round of civilian furloughs, would exacerbate morale problems (with surveys already showing marked decline in morale this decade) at a time when Defense and other agencies need to recruit talented younger Americans to serve in government.

 

The old adage says that insanity is doing the same thing a second time and expecting a different result. Why can’t we avoid marching off another budgetary cliff?

We can. The solution lies in another version of the Murray-Ryan budget deal of 2013 that produced some budgetary stability for the past two years. Murray-Ryan II could plus up defense by several tens of billions and perhaps increase wartime or OCO funding (which is not subject to the budget caps) to fund more of those defense budget needs that bear at least some relation to wartime activities. Such a deal could also include some substantial increases in non-defense spending, including added funds for agencies that support national security. As with budget deals in the recent past, this one might need to offset the added defense and non-defense funding through modest cuts in lower-priority entitlements along with increases in fees or other tax changes not involving rate hikes. Or we could let the deficit, which has declined considerably in size in recent years, temporarily grow by modest amounts.

 

Getting started now is key. Congressional leaders and the Administration need to appoint negotiators they trust and provide broad guidance. Negotiators then need to be put in a room with locked doors. They would get unlimited pizza but no freedom until they reach a deal. Such an approach has worked during past negotiations and could work again.

It’s time to order the pizza!

Robert Hale is currently a Fellow at Booz Allen Hamilton; from 2009 to 2014 he served as the comptroller and CFO at the Defense Department.  Michael O’Hanlon is senior fellow at the Brookings Institution and author of the new book, The Future of Land Warfare.

Image: Flickr/Official U.S. Air Force