Defense Spending Would Be Trimmed 1% | Wall Street Journal


The Defense Department proposes to cut thousands of civilian jobs, raise medical fees for veterans and close bases across the country as it shifts from the war in Afghanistan to emerging threats in Asia and cyberspace.

Defense Secretary Chuck Hagel outlined the proposals on Wednesday as part of the Obama administration’s $526.6 billion military budget for fiscal 2014, a plan likely to encounter opposition from both parties.

The Pentagon plan is an unfinished proposal that is likely to require deeper cuts. “These are defining times,” Mr. Hagel said at a briefing at the Pentagon. “We are living in a world of complete uncertainty.”

President Obama held a press conference in the White House Rose Garden to announce his budget plan for the 2014 fiscal year.

Overall, the president’s budget seeks $150 billion less in projected military spending over the next 10 years, on top of $487 billion in cuts already set to take place over the same time.

But it doesn’t factor in the impact of the across-the-board spending cuts known as the sequester that require the Defense Department to reduce its current-year budget by as much as $41 billion—and by $500 billion over the next 10 years.

The proposed military spending for 2014, about a 1% decline from 2013 estimates, comes as the Pentagon is winding down the war in Afghanistan, confronting threats in Asia and re-evaluating what the military can do in an era of austerity.

One of Mr. Hagel’s most politically sensitive ideas is a renewed proposal to establish a commission charged with shuttering military bases. That is especially difficult for lawmakers representing communities that depend economically on such installations.

On top of the $526.6 billion in 2014 spending, the budget estimates the Pentagon will need upward of $88.5 billion to fund the war in Afghanistan and other overseas war spending. But the final estimate on that won’t come for several more weeks.

Military leaders have deferred decisions on further reducing the size of the Army and Marines, but are looking to trim the Defense Department civilian workforce by 5% to 6%. The five-year plan aims to cut up to 50,000 of the 800,000 civilian jobs.

The budget also outlines modest plans for cuts to major weapons programs, sparing for now the next-generation F-35 fighter jet and a new aircraft carrier.

Narrower cuts would hit programs related to missile defense, drones, Army helicopters and cargo planes. These proposed reductions likely will face scrutiny from lawmakers, who in the past have succeeded in protecting some of the projects.

Mackenzie Eaglen, a defense analyst for the conservative and pro-defense American Enterprise Institute, said it was a mistake to ignore the sequester cuts in the budget. “By avoiding the specific and painful details of what sequestration would actually look like, the Pentagon is making it easier to keep the law on the books,” she said. “Pain gets attention.”

The Obama budget promises $19 billion in reductions from such actions as holding military pay raises to 1%. It includes a renewed push to kill programs such as the C-27 transport plane, made by Finmeccanica SpA’s FNC.MI -1.20% Alenia North America, and the current generation of Global Hawk surveillance drones, made by Northrop Grumman Corp., NOC -1.29% which have been plagued by high purchase prices and operating costs.

While missile-defense spending would rise in some areas, the budget calls for the termination of a precision-tracking space system to save about $1.7 billion. That program encompasses a half-dozen contractors, including Northrop Grumman.

The budget includes a modest increase for the growing U.S. Cyber Command and money to build new Navy ships that will play a critical role in the plan to shift more forces to Asia, where China and North Korea pose challenges to U.S. power.

Mr. Hagel has ordered Pentagon leaders to conduct a new review of the nation’s military strategy in light of the fiscal uncertainty.

The administration proposes new fees for veterans in the military’s Tricare medical system, including an annual $140 fee for families in the standard fee-for-service program that would rise to $250 over five years. Also included is a proposal to raise annual enrollment fees in Tricare’s HMO-style system from $539 per family to as much as $750.

Congress has rebuffed previous such efforts, and the new proposals are certain to face opposition.

via Defense Spending Would Be Trimmed 1% | Wall Street Journals.