By Megan Scully
As House and Senate negotiators attempt to hammer out a budget agreement this fall, the Pentagon finds itself once again in the crosshairs of a larger political battle over taxes and spending priorities.
In a rare point of agreement between the two chambers, defense spending levels prescribed in the House and Senate budget plans are just over $6 billion apart, a minor difference in a discretionary spending budget of about $1 trillion.
But both chambers blow past the $498.1 billion defense budget cap by about $50 billion — and they get there in very different ways.
To offset the Pentagon’s spending boost in their budget plan, House Republicans sought deeper cuts to discretionary non-defense domestic spending accounts. Senate Democrats, meanwhile, used a higher top-line figure, saying they would make up the savings in later years.
“The starting point in both budget resolutions is they agree on defense but they don’t agree on basically anything else,” said Todd Harrison, a defense budget analyst at the Center for Strategic and Budgetary Assessments. “So how do they negotiate all those other differences, and what does that mean for defense?”
With the two chambers so at odds over those other issues, Harrison sees only one possible conclusion for the Pentagon in this budget conference, which was part of a broader agreement to raise the debt ceiling and reopen the government through a continuing resolution (HR 2775) that expires Jan. 15.
Defense spending levels, he predicts, will be lower than those prescribed by either chamber, either through a budget agreement for fiscal 2014 or by the forcing mechanism known as sequester.
“I’m not very optimistic that this is going to lead to any breakthrough. So if you’re not going to have some sort of a breakthrough deal, then the default is sequester,” Harrison said. “That is the law that is already in place. And without a deal, it can’t be turned off.”
Pushing for Defense
But hawkish lawmakers, including at least one budget conferee, want to make defense more than just a sideshow to the larger political drama.
“People like me are deathly worried that we put our Defense Department on an unsustainable path,” said Republican Sen. Lindsey Graham of South Carolina, one of the Senate negotiators for the budget conference and a vocal member of the Armed Services Committee.
Graham said he wants changes to entitlement spending, which has been unpopular with Democrats. But he also said he would be open to raising revenue in a “responsible way,” including potentially eliminating some tax exemptions, if it means a “real deal” that relieves the pressure on discretionary spending.
Several other moderate Senate Republicans, including John McCain of Arizona, Susan Collins of Maine and Bob Corker of Tennessee, said they hope the budget conference will provide adequate funding for defense and other priorities.
Corker said he believes tackling mandatory spending in combination with providing sequester relief will be a main goal of the conference, given Democrats’ desire to end sequester.
“There is a lot of desire around here to look at mandatory reforms that are more thoughtful and actually work better for our country over the long haul, so I hope we can take advantage of it,” Corker said.
Sen. Jack Reed of Rhode Island, an appropriator and the No. 2 Democrat on the Senate Armed Services Committee, said he continues to support the Senate budget blueprint. But Reed, who said defense is one of many critical issues that will be discussed during the conference, left the door open for compromise.
“There’s always room for principled discussion,” Reed said.
While a grand bargain has remained elusive for more than two years, Collins said she remains hopeful that it is within reach.
“We did it on this,” Collins said Wednesday night after the two chambers reached a short-term spending deal and raised the debt ceiling.
Pentagon Weighs In
At the Pentagon on Thursday, Defense Secretary Chuck Hagel said the continuing resolution may have allowed the government to reopen, but did not remove the “shadow of uncertainty” lurking above his department.
Sequestration, Hagel said, remains the law of the land. And on top of that, the department must now contend with the constraints of a continuing resolution, which does not allow the Pentagon to start new contracts and otherwise limits spending for programs to last year’s levels.
Hagel called on Congress to craft a “balanced, long-term spending bill,” but said he didn’t know whether lawmakers can reach an agreement to end sequestration. The department, he said, continues to plan for a range of scenarios.
Pentagon comptroller Robert F. Hale said the department will likely spend at slower rates than the continuing resolution allows, in case sequestration remains in place in January.
In a Thursday letter to the leaders of the House and Senate Budget Committees, the National Defense Industrial Association called on lawmakers to provide stable funding for the Defense Department.
“We hope your conference committee foreshadows a return to the regular order in the adoption of a joint budget and appropriations measures,” according to the letter. “Neither our military nor defense industry can cope with the levels of uncertainty we have faced for the past few years.”
The NDIA letter acknowledged that defense cuts must be part of any deficit-reduction proposal, but stressed that spending bills must provide “certainty and flexibility.”
“Sequestration makes both impossible,” the letter stated.