The Sequester Fight Isn’t Over Yet; Now…Dueling Budget Resolutions | The Will and the Wallet


Though we’ve tripped merrily past March 1st and OMB has duly issued its sequestration order, its not yet clear defense (or any government spending–including international affairs) will be forced to live at sequester levels.

Base Defense

This week both chambers passed budget resolutions in committee, and both removed the cuts sequester imposed–on defense at least.  The House budget waived sequester but keeps defense flat from FY13 (presuming the CR passes) and matches the caps in the BCA for the next nine years.*  That means defense under the House plan would be held flat in real terms: no cuts, but no growth either.  It also represents the first conscious nominal cut to defense by the Republican-controlled House, as the Chairman’s mark acknowledges:  “While this is significantly less than the levels in previous budget resolutions passed by the House, it is approximately $500 billion more than will be available absent changes in the Budget Control Act.”  In another sense, of course, such a cut seems pretty minor compared to Republicans not defending defense over the sequester as they were expected to.

The Senate budget resolution waives sequester too, but it grows defense year over year at about 1% less than inflation.  So nominally defense still would be growing, but in real terms it would be going down.  By doing so the Senate resolution saves $250B from defense over 10 years compared to the BCA caps, half the cut sequester requires achieved in a much more responsible way, but still a cut; if DoD took a fair share of that cut, it would put DoD’s base budget about 10% below its FY10 peak.**

Overseas Contingency Funding

For war funding, the House resolution allocates $93B for FY14, or about $6B less than FY13 is likely to get but twice the President’s placeholder from last year’s budget, and $35B a year for FY15-23.  Those allocations don’t quite cap war funding: section 603 of the legislative language chastises the President for not submitting a budget yet and then gives the Chairman of the Budget Committee the authority to change the war funding depending on what the President says when he does submit a budget.  So the House provides fairly unfettered flexibility for war funding, though not as free as the BCA.

The Senate resolution goes one better in handling war costs.  It caps FY14 at $50B, slightly more than the President’s placeholder from last year’s budget, and FY15 at $25B, significantly less than the President’s placeholder. It provides no specific allocation for FY16 on, presumably assuming a near complete exit from Afghanistan.  But the resolution also includes a mechanism for providing more war funding if needed.  It has a deficit neutral reserve fund for any additional war funding. That means war funding can grow to meet any operational need, but the additional spending must be offset–either through decreased spending elsewhere or more revenue.  That’s not quite as strong as requiring a tax surcharge as I recently called for, but it’s still a real mechanism that acknowledges both the needed flexibility of war funding and also that our military operations should not bankrupt our nation.

International Affairs Funding

International affairs funding is also treated pretty differently by the two committees.  The House cuts f150 12% from the presumed FY13 number in real terms, where the Senate increases f150 by 3%.  That’s the difference between a cut of $5B versus an increase of $1B in real terms. From there both resolutions grow international affairs at about inflation, or flat in real terms.  Still, the difference in their first year means the Senate provides $70B more over ten years.

The two committees have produced very different resolutions, though the differences in national security are mainly in the details.  Both waive sequester for defense but neither grows defense above inflation.  The Senate provides less money for defense and more for international affairs.  The House does the opposite.  The remaining question though is will anybody actually cut a deal that waives sequester?  Or are all these proposals already obsolete?

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