What Is the Department of Defense’s Plan for Meeting Sequester-level Caps?
April 23, 2014
On April 15, 2014, the Department of Defense (DoD) released a supplement to the fiscal year 2015 president’s budget request (PB15) describing the impact of sequester-level spending over the next five years. This Critical Questions identifies those impacts and discusses what questions remain unanswered. For reference, the DoD document can be found here: http://www.defense.gov/pubs/2014_Estimated_Impacts_of_Sequestration-Level_Funding_April.pdf.
Q1: What does this new budget release add to the discussion of defense budget plans and priorities?
A1: PB15, submitted to Congress on March 4, lays out the spending plan and priorities for DoD over the next five years caps as adjusted by the Bipartisan Budget Act in FY15, it exceeds those budget caps in FY16–19 by a combined $115 billion. Previously released budget materials provided little information of what would happen if that additional $115 billion in funding was not granted. DoD released this document to describe the consequences of maintaining the sequester-level budget caps (otherwise known as revised Budget Control Act or BCA caps) currently in law, with impacts both in reductions in current forces and in cuts to future procurement plans.
The broad relationships between spending streams illuminate a few DoD priorities. The cuts from PB15 to the BCA cap level would be shared relatively evenly among the service components, with the Air Force taking a slightly higher share of the cuts compared to its share of the budget, and defense-wide funds taking a slightly lower share. The allocation of cuts among accounts illustrates some prioritization. Military Personnel takes the smallest cut (only 2 percent across the Future Years Defense Program [FYDP]), but as discussed below, this is because PB15 already assumed the full cut in end strength for Army and Marine Corps. Operation and Maintenance (O&M) gets limited protection from the cuts for readiness purposes; Research, Development, Test and Evaluation (RDT&E) takes a slightly higher percentage of the cuts than its budget share (but not by much); Military Construction also loses more than its share. But the big loser, as is frequently the case during a drawdown, is Procurement. Procurement accounts for 20 percent of the FYDP spending but takes over 40 percent of the cuts under a sequester level of spending.
Q2: Does this answer the big remaining questions about the Future Years Defense Program (FYDP) and its connectivity to the BCA caps?
A2: Two major disconnects still remain unexplained—the funding of ground force end strength and the refueling and overhaul of the aircraft carrier George Washington (CVN-73) required to keep it in service and maintain the fleet at 11 carriers. These two issues are among the most controversial subjects going into this budget cycle. The DoD document states that if the higher PB15 level of funding were to be enacted through the FYDP, then Army and Marine Corps end strength would not be cut to the proposed 420,000 and 175,000, respectively. Similarly, it asserts that CVN-73 would not be cut under the DoD plan, keeping the carrier force at 11.
Nonetheless, higher levels of end strength (440,000–450,000 for the Army and 182,000 for the Marine Corps) and the required overhaul of the carrier have not been funded in the FYDP, even with the additional $115 billion. The document simply states that these items “will be reviewed further in subsequent budget cycles” and asserts that they will be funded. If this is the case, then presumably something else inside the $115 billion plus-up (or something in the rest of the base budget) would still have to be cut to accommodate that additional end strength, and that something has not yet been identified in public documents.
Q3: Under this sequester-level spending, what additional force structure will DoD have to cut?
A3: Included in the $115 billion cut are some currently fielded capabilities that will be reduced. The KC-10 tanker fleet would be divested, reducing overall tanker capacity for the force over the FYDP. Unmanned aerial systems would take a hit with the early retirement of the Predator fleet and divestment of the Global Hawk Block 40. For the Navy, 6 destroyers currently in service would be laid up in addition to the 11 cruisers planned to be set to reduced operating status in PB15. One carrier would be retired, bringing the nuclear fleet down to 10 (per the discussion above regarding CVN-73). Cuts to end strength in both Army and Marine ground forces are also significant (as addressed in more detail above).
One of the well-publicized debates during the budget process has been the decision between keeping the U-2 spy plane and replacing it with the Global Hawk Block 40. Over the past two budget cycles this decision has wavered back and forth, with the PB15 electing to commit to the Global Hawk Block 40. Under sequester-level funding, both of these fleets would be eliminated, with the Global Hawk Block 30 taking on the high-altitude, long-endurance reconnaissance mission.
Q4: What future investments are getting cut?
A4: As noted previously, under the BCA caps investment in equipment takes the biggest hit. The biggest cuts under a capped budget include 17 F-35s, 3 DDG-51s, 1 Virginia-class sub, and over $3 billion in rotary aircraft funds for the Army and Marines. The Navy program has not been fully laid out, but it cuts fleet procurement across the FYDP by 8 ships. Four of these ship cuts are listed in the table below (3 destroyers, 1 submarine). Based on the other budget line items affected, the other 4 ships are likely coming out of support ships, Littoral Combat Ships, and Afloat Forward Staging Bases, although the exact distribution is unclear. Under the caps, DoD would also defund two missile defense components—the follow-on interceptor for Ballistic Missile Midcourse Defense and additional ground-based sensor. A complete list can be found in the table below.
Q5: What questions remain?
A5: The questions over the funding of the carrier overhaul and additional end strength in the Army and Marine Corps are the primary questions yet to be answered. However, other questions remain as well. If the FY15 requested “Opportunity, Growth, and Security (OGS) Initiative” funding is not enacted, will the near-term spending priorities enumerated there be higher priority than the spending in the $115 billion plus-up, and will it thus further crowd out other items in FY16 and beyond? How will the additional $115 billion in FYDP funding be prioritized when faced with additional pressures, including the $34 billion in efficiencies that are built into the assumptions of the FYDP? If these policy changes are not passed by the Congress, much of that $34 billion in savings would have to be found elsewhere. Will the war-related supplemental appropriations (Overseas Contingency Operations [OCO]) be able to absorb some of the OGS Initiative spending? And finally, if as the document states, “[t]hese impacts would leave our military unbalanced and eventually too small to meet the needs of our strategy fully,” then does the extra $115 billion fully meet those needs? Is that the razor’s edge on which the defense strategy rests? The fundamental dichotomy persists that DoD has a spending plan for sequester-level funding but no strategy for it, and a strategy for higher spending but no funding plan for it.
Ryan A. Crotty is a fellow and deputy director for defense budget analysis at the Center for Strategic and International Studies in Washington, D.C.
Critical Questions is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).
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