Ignoring Sequester, but Passing a Bill | The Will and the Wallet Blog

By Russell Rumbaugh

The House has now passed its bill for FY13 appropriations. The House version includes an actual appropriations bill for Defense and VA/MILCON with a CR for all other bills and agencies. The Defense and VA/MILCON parts look pretty settled—all the tables in the explanatory statement say ‘Conference’ not ‘House’ and the press release boasts it “has been negotiated by the House and Senate”. There are several interesting aspects of the bill, but really the most interesting is how normal a bill it is. Most of this bill sets aside all of the brouhaha we’ve been living in for a year and half and worries only about adjusting the President’s request for FY13 to reflect Congressional preferences, what an appropriations bill does in any old year.

Still, we do live in this brouhaha and so its worth looking at this bill through that lens:

1. The bill does nothing to sequester. There is no blunting the effects or turning it off or changing how it is applied. Nothing. Chairman Rogers’ press release acknowledges that: “This funding is subject to sequestration, bringing the top-line overall rate of spending in the CR down to the sequestration level of approximately $982 billion.” The press release promptly obscures that by talking about the defense and VA/MILCON piece as if sequester will not happen, but that is just a rhetorical gimmick: the defense/VA refer to pre-sequester levels and the rest refers to post-sequester levels. Both true, but referring to different points in time.

2A. The bill meets the caps re-created by the New Year’s deal of security and non-security. CBO in their February update had said that the CR was $6.8B above the security cap. Now, CBO says it exactly meets the $684B cap. To get there the bill in its second to last section requires an across-the-board cut to security of 1/10th of a percent. 1/10th of a percent is not very much money; less than $0.8B in a $684.8B pot, and is done as a rescission only to non-war funding. Still, kind of ironically it uses a mechanism awfully similar to what would have been used to bring the bill back underneath the caps.

2B. DoD is getting about $529B when you add together the money it gets both from the defense part and the VA/MILCON part of the bill. That’s about $3B less than FY12, and about $800M more than the President’s request. The appropriators can claim to be flat with FY12 and more than the President because they consider the MILCON section separately, which does most of the cutting from the year before. That is still less resources the Pentagon is getting overall compared to last year.

2C. DoD likely did better under the broader security cap than it would have under the narrower 050, national defense only, cap. Although no one has provided an exact 050 number, 050 other than DoD has recently been about $24B. And in this bill its probably even more as NNSA got two of the anomalies in the extended CR, increasing nuclear weapons spending by about $350M and nonproliferation spending by $160M more than FY12. If we add that $24B to DoD’s $529B, 050 makes it to $553B and blows right past the $544B 050 cap.

2D. As we predicted, that increased DoD spending was paid for by cutting International Affairs. The President’s request had met the security cap at the time but cut DoD by $4B from FY12 to do so. This bill gets to the cap by cutting $4B from the President’s request for 150, International Affairs. (the cap was also $2B lower due to the New Year’s deal, so DoD didn’t get all of the President’s request cut back).

3. Much of the description of this bill has been about how it gave DoD some relief, or softened the blow of sequester. But that is an overstatement. As we said up front, this bill doesn’t do anything to ameliorate sequester. What it does do is respond to the President’s request rather than just carry forward last year’s funding. And as we noted at the time, the President’s request made really big changes. Maybe most importantly it increased the readiness accounts even as it cut the topline, ensuring we don’t get a hollow force as has happened in past drawdowns. The Pentagon is at fault for confusing some of these issues, as our own Gordon Adams has noted. In their fight to stave off sequester they blurred what would be caused by sequester and what would be caused by operating under a CR. Readiness was their poster child because it had the biggest swing between the PB13 request and the effect of sequester, largely because it had the biggest swing between FY12 and the President’s request. Now that the appropriators have updated their bill to the President’s request, that swing is gone. The chart to the right illustrates that this bill is a traditional appropriations bill: it is different than last year but not that different from the President’s request. Compared to FY12, the bill cuts funding from each title by an average of 3.2% (though O&M gets a 6.4% increase). Compared to the President’s request, it increases titles by an average of only 0.3% (O&M is actually cut, but by only 0.8%). This bill plays off the President’s request with adjustments for Congressional oversight and spells out the amounts to be spent on each program, with the same amount of execution flexibility that every defense bill provides.

In fact, in the part of the bill maybe most relevant to sequester, the explanatory statement picks up the language the Senate appropriators used last year to define what programs, projects, and activities are: down to the line item for procurement and RDT&E, and at the account level for O&M and MILPERS. That detail defines from what pot the percentage cut by sequester must be taken. In other words, in the part most relevant to sequester, the appropriators made sequester tougher not easier.

Now the fight moves to the Senate and Democrats attempt (maybe) to pass omnibus appropriations for the other government agencies and not just DoD (including State and the other international accounts), and possibly the President’s bid to waive sequester.

via Ignoring Sequester, but Passing a Bill | The Will and the Wallet Blog.