Defense Spending and the Budget Control Act
Limits
Amy Belasco
Specialist in U.S. Defense Policy and Budget
May 19June 3, 2015
Congressional Research Service
7-5700
www.crs.gov
R44039
Defense Spending and the Budget Control Act Limits
Summary
Enacted on August 1, 2011, the Budget Control Act (BCA) as amended (P.L. 112-75, P.L. 112240, P.L. 113-67) sets limits on defense spending between FY2012 and FY2021 that are playing a
significant role in the debate about the appropriate level of defense spending. Each year, if
Congress enacts a spending level that exceeds BCA caps for the defense base budget, the
President is required to sequester or levy across-the-board cuts to each type of defense spending
to meet the BCA caps. These spending levels are sometimes referred to as revised or “sequester”
caps. War-designated funding (for “Overseas Contingency Operations”) is not subject to BCA
caps.
Under these limits, national defense spending decreased from the $578 billion requested in the
FY2012 President’s Budget to $553 billion in FY2012 and $518 billion in FY2013, including a
sequester. In the next two years, Congress complied with revised BCA caps, providing $521
billion in FY2014 and the same amount in FY2015, thus basically setting a nominal freeze in
spending for three years (without an increase to cover inflation). At the FY2015 low point of the
BCA path, defense spending would be equivalent in real terms (the same purchasing power) to
the level between FY2007 and FY2008 and would be somewhat below the recent FY2010 high
point.
For FY2016, the BCA caps for defense are slated to rise from $521 billion to $523 billion, a
continuation of the nominal freeze for the base budget. In FY2016, the President requested
funding of $561 billion, $38 billion above the BCA defense cap. To the extent that FY2016
enacted appropriations for defense exceed this cap, a sequester will be triggered, requiring largely
across-the-board decreases under current law.
Following the nominal freeze, BCA caps provide annual increases in defense spending starting in
FY2017 that average $13 billion, rising from $523 billion in FY2016 to $644 billion by FY2021,
the last year of the BCA caps. These increases would provide sufficient funds to more than offset
the effects of inflation, setting defense spending at about .005% real growth each year through
FY2021.
The current debate in Congress has centered on whether to (1) adjust the BCA defense caps
upward; (2) move base budget spending to accounts designated for Overseas Contingency
Operations (OCO) that are not subject to spending limits; (3) reduce the defense spending in the
Administration’s request to comply with BCA revised caps; or (4) use some combination of these
approaches, all in order to avoid a sequester. While DOD and other policymakers contend that
BCA caps could make it difficult to meet future threats, other policymakers argue that defense
spending could be reduced to comply with the caps and still provide DOD with the necessary
capabilities.
The recently passed conference version of the FY2016 budget resolution would meet sequester
caps by transferring $38 billion from the defense base budget request to accounts designated for
Overseas Contingency Operations that are exempt from the caps. This approach has been
characterized as budget gimmickry and has reignited debate about whether war funding is a
“slush fund.” The House-passed version (H.R. 1735) of the FY20166of the FY2016 National Defense
Authorization Act (H.R.
1735) also moved $38NDAA) moves $38.2 billion fromin Operation and Maintenance (O&M) funds
requested in the base budget request to funds to be designated as OCO.
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Defense Spending and the Budget Control Act Limits
, and the Senate-reported
version moves $39.0 billion in the same fashion. The Administration signaled that the President’s
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Defense Spending and the Budget Control Act Limits
advisors will recommend a veto of both H.R. 1735 and S. 1736 in part because of these transfers,
which are characterized as risking “undermining a mechanism meant to fund incremental costs of
overseas conflicts and fails to provide a stable, multi-year budget on which defense planning is
based.”
To count as OCO and be exempt from BCA caps, individual accounts in appropriations bills must
include an OCO designation and the President must designate such funds as OCO after
enactment. It is not clear whether the Administration would do that. The recently reported
FY2016 Defense Appropriations bill (unnumbered) also moves $38.3 billion from the base
request to OCO-designated accounts.
Since enactment, both Congress and the Administration have adapted to the BCA caps. While
Congress has raised the caps in the near term to ease DOD’s adjustment, it has left intact caps in
later years. The Administration has made substantial adjustments to BCA limits by reducing its
defense budget plans, shrinking the savings required to meet BCA caps for the decade from $1.0
trillion in savings to $180 billion.
With four of the ten years of the BCA limits completed, the gap between the FY2016
Administration plan for total defense spending and BCA limits now in effect has narrowed. Over
three-quarters of the savings needed are already incorporated in current Administration plans as
of the FY2016 budget. To close this gap for the six remaining BCA years, Congress would have
to reduce the Administration’s FY2016 plan by an average of 5% instead of the 16% originally
required.
There are a variety of savings approaches that DOD could take to adapt to BCA spending limits,
such as:
•
temporary cuts (as were typical of the FY2013 sequester);
•
recurring savings from force structure decreases or compensation restraints: both
would contribute enduring savings; and
•
efficiency savings that reduce the cost of carrying out various programs and
activities.
In a report to Congress last year, DOD outlined how it would meet the 4% cut of $115 billion in
BCA cuts for FY2015-FY2019, its planning horizon at the time. DOD’s plan would rely heavily
on cuts to its modernization programs, and would make significant cuts to service readiness
programs. In adapting to the BCA, DOD faces uncertainties in its future projections of cost,
exacerbated by long-term trends in rising costs per troop that it is beginning to reverse.
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Contents
Defense Spending Limits and the Budget Control Act (BCA) ........................................................ 1
Alternate Approaches to BCA Caps .......................................................................................... 23
Congressional Choices .............................................................................................................. 3
Adapting to BCA Spending Limits .................................................................................................. 3
Raising Defense Spending Limits ............................................................................................. 4
Lowering Long-term Defense Spending Plans .......................................................................... 45
Defense Spending Complies with BCA Caps for FY2012-FY2015 ......................................... 6
The BCA Spending Path and the FY2016 Request ......................................................................... 67
The Story for DOD .................................................................................................................... 8
Defense Department Concerns .................................................................................................. 9 10
The FY2016 Budget Resolution and BCA Caps............................................................................ 1112
Distinguishing Between Base and OCO Funds ....................................................................... 13
Using OCO Funds as a Safety Valve ....................................................................................... 14
FY2016 Budget Resolution and FY2016-FY2021 Caps ......................................................... 15
BCA Revised Caps in Historical Perspective ................................................................................ 1617
Buildups and Drawdowns in Defense Spending ..................................................................... 1718
Trends in DOD Spending ........................................................................................................ 1920
Different Types of Savings ............................................................................................................ 2021
Temporary or Short-Term Savings .......................................................................................... 2122
Designating Funds as OCO ..................................................................................................... 2223
Recurring Savings Affect Later Years ..................................................................................... 2223
Restraining Military Pay Raises and Compensation ......................................................... 2223
Force Structure Savings Grow Over Time ........................................................................ 2425
Savings from Delay ................................................................................................................. 2526
The F-35 Joint Strike Fighter ............................................................................................ 2526
Savings Requiring Upfront Investments.................................................................................. 2627
GAO Evaluation of Base Closure Savings ........................................................................ 2728
CBO Assessment ............................................................................................................... 2829
Efficiencies: Definitions and Concerns ................................................................................... 2829
Concerns Raised About Efficiency Savings ...................................................................... 3031
DOD’s FY2013 Sequester Experience .................................................................................... 3031
How Sequestration Works ................................................................................................. 3132
Predictions and Experience ............................................................................................... 3132
Flexibility Available to DOD to Mitigate Sequestration ................................................... 3334
DOD’s Plan for Complying with BCA Limits ............................................................................... 3536
DOD’s Plan Emphasizes Modernization Cuts, Protects Support Activities ............................ 3738
Potential Changes in Army Force Structure ...................................................................... 3940
DOD’s Approach to Modernization Cuts .......................................................................... 4041
DOD Individual Weapon System Cuts under BCA Limits ............................................... 4142
Operations and Maintenance: Readiness vs. Other Support .................................................... 4344
Uncertainties Facing DOD............................................................................................................. 4445
CBO Projections of the Cost of DOD’s Plan ........................................................................... 4546
Rising Cost per Troop.............................................................................................................. 4546
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Figures
Figure 1. The BCA and Changes in National Defense Spending Plans ........................................... 56
Figure 2. Gap Between BCA Limits and DOD Plans Narrows ....................................................... 89
Figure 3. BCA Revised Caps and FY2016 Budget Resolutions .................................................... 1213
Figure 4. National Defense Spending FY2016-FY2025, Base and OCO-Designated .................. 1617
Figure 5. Department of Defense Spending: FY1950-FY2025 ..................................................... 1718
Figure 6. DOD Spending Including Both Base Budget and Emergency/OCO.............................. 1819
Figure 7. Trends in Types of DOD Spending in the Base Budget ................................................. 2021
Figure 8. DOD Budget and BCA Cuts: FY2015-F2019 ................................................................ 3839
Figure 9. Cost Per Troop, FY1980-FY2016 Request .................................................................... 4647
Figure 10. Trends in Average Per Troop Cost by Type of Spending.............................................. 4748
Tables
Table 1. FY2016 President's Budget (PB) Plan and BCA Caps for National Defense .................... 7
Table 2. FY2016 President's Budget Plan and BCA Caps for DOD .............................................. 10
Table 3. FY2016 Budget Resolution and National Defense BCA Caps ........................................ 1516
Table 4. Changes in F-35 Plans, FY2012 President’s Budget (PB) vs. FY2016PB ...................... 2627
Table 5. Implementation of DOD’s FY2013 Sequester ................................................................. 3435
Table 6. Sequester Cuts by Type of Spending................................................................................ 3536
Table 7. DOD's Savings Plan for FY2015-FY2019 By Service .................................................... 3738
Table 8. DOD’s BCA Savings, FY2015-FY2019, Modernization vs. Personnel
Operations, and Support ............................................................................................................. 3839
Table 9. DOD's Plan for Achieving BCA Modernization Savings, FY2015-FY2019:
RDT&E and Procurement........................................................................................................... 4041
Table 10. DOD's Cuts to Individual Weapon Systems under BCA Caps: FY2015-FY2019 ......... 4142
Table 11. DOD's Plan for Achieving BCA Operation & Maintenance Savings, FY2015FY2019 by Category .................................................................................................................. 4445
Table 12. Selected Bibliography of Reports and Studies on Reducing Defense Spending ........... 5859
Table B-1. Adjustments in BCA Spending Caps ........................................................................... 5253
Table C-1. CBO Baseline, Administration Defense Plans and BCA Defense Limits .................... 5455
Appendixes
Appendix A. How BCA Defense Spending Limits Are Set ........................................................... 4950
Appendix B. Raising BCA Caps in FY2013-FY2015 ................................................................... 5152
Appendix C. Defense Plans Partly Adapt to BCA Spending Limits.............................................. 5455
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Appendix D. Selected Bibliography of Ways to Reduce Defense Spending ................................. 5859
Contacts
Author Contact Information........................................................................................................... 6263
Acknowledgments ......................................................................................................................... 6364
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Defense Spending and the Budget Control Act Limits
Defense Spending Limits and the Budget Control
Act (BCA)
Enacted August 2, 2011, the Budget Control Act (BCA, P.L. 112-25) sets limits for National
Defense spending for each year from FY2012-FY2021 that applies to the base budget. War
spending—designated by both Congress and the President as for “emergencies” or for “Overseas
Contingency Operations” (OCO)—is essentially exempt from these caps.1
Since enactment, the appropriateness and potential effects of the BCA spending caps on defense
spending have generated a vigorous debate. Passed by strong majorities in both houses—269-161
in the House and 74-26 in the Senate—the spending limits reflected concerns about increases in
the federal deficit.2
In return for a $2.1 billion increase in the debt limit, the BCA reduced the Congressional Budget
Office (CBO) baseline for total discretionary spending by the same amount by setting annual
limits for FY2012-FY2021 that, if necessary, would be enforced by a sequester. The decrease to
the deficit focused almost entirely on the discretionary spending that is appropriated annually and
makes up about one-third of total federal spending; the two-thirds of the budget for direct or
mandatory spending, primarily for entitlement programs like Social Security and Medicare, was
not affected.
To achieve the $2.1 trillion in required savings, the Budget Control Act set “initial caps” that
would reduce discretionary spending by $1.0 trillion over the ten-year decade, FY2012FY2021—with half for defense and half for nondefense. A second tranche of savings was to be
based on a plan to be developed by the congressionally established, bipartisan, Joint Committee
on Deficit Reduction (or Super Committee).
When that committee was unable to develop a plan to ensure these savings, the BCA provided
that a second set of “revised caps” or “Joint Committee limits” would go into effect for National
Defense, budget function 050 that is comprised primarily of the Department of Defense or DOD
(budget function 051) and “nondefense” or all other discretionary programs. For FY2013, the Act
required that the President order a sequester to reduce the enacted level for defense by the amount
specified.3 Under a sequester, OMB calculates the pro rata percentage cut to each type of
spending or program that is necessary to reach the BCA limit and cancels that budget authority.4
(For more detail, see Appendix A.)
1
The caps are raised to accommodate this spending; see §251(b)(2)(A) of the Balanced Budget and Emergency Deficit
Control Act of 1985 (hereinafter BBEDCA). Caps are set in terms of Budget Authority (BA). All figures are BA unless
listed otherwise.
2
BNA, Daily Report for Executives, “U.S. Budget CBO Projects Deficit to Shrink Again But Warns Slow Economy
Likely to Persist,” 8-25-12.
3
OMB, Sequester Preview Report to the President and Congress for Fiscal Year 2014 and OMB Report to the
Congress on the Joint Committee Reductions for Fiscal Year 2014, p. 3, April 10, 2013, May 20, 2013;.
4
OMB, Final Sequestration Report to the President and Congress for Fiscal Year 2012, January 2012, p. 3;
http://www.whitehouse.gov/sites/default/files/omb/assets/legislative_reports/sequestration/
sequestration_final_jan2012.pdf.
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After FY2013, a sequester is required only to the extent that annual enacted appropriations breach
or exceed separate defense and nondefense “revised caps” or “limits” set in the BCA. The breach
would be eliminated by the sequester. Some commentators refer to these limits as “sequester”
caps, presumably because spending above these levels would trigger a sequester (for more detail,
see Appendix A).
The President’s request for FY2016 exceeds the BCA cap by $38 billion. If Congress were to
enact that amount, a sequester would be triggered. Congress is currently debating its response,
which could range from raising the caps themselves with new statutory language, to cutting
defense spending to comply with the cap, to designating base budget spending as Overseas
Contingency Operations (OCO) to avoid breaching the caps (as proposed in the FY2016 budget
resolution S.Con.Res. 11).. S.Con.Res. 11, the FY2016 budget
resolution, H.R. 1375, House-passed FY2016 National Defense Authorization Act (NDAA), S.
1376, the Senate-reported NDAA all propose moving and designating $38 billion in funds
requested in the base budget as for OCO so as to avoid a sequester. To be exempt from BCA caps,
funds must be designated as OCO in both appropriations act language and by the President after
enactment.5
The President has signaled that his advisors would recommend a veto of either H.R. 1375 or S.
1376 in part because of this reliance on transferring base funds to OCO, which is characterized as
“undermining a mechanism meant to fund incremental costs of overseas conflicts and fails to
provide a stable, multi-year budget on which defense planning is based. . . [and] ignores the longterm connection between national security and economic security and fails to account for vital
national security functions carried out at non-defense agencies.”6
This report uses the terms “BCA revised limits” or “BCA caps” to refer to the BCA caps as
amended by the American Taxpayer Relief Act (ATRA, P.L. 112-240) and the Bipartisan Budget
Act (BBA, P.L. 113-67) that Congress must meet to avoid a sequester.57 Unless indicated
otherwise, all figures are budget authority (BA) for the defense base budget, which excludes
funds designated as emergency or for OCO that are not subject to BCA caps.
In testimony by defense spokesmen, these BCA spending limits or revised caps are often used to
refer to two different dilemmas faced by Congress:
•
reducing defense spending to ensure compliance with BCA caps to avoid an
across-the-board reductions; or
•
facing the potential effects of a sequester itself on the defense programs and
activities if Congress does not meet the limits.
Alternate Approaches to BCA Caps
Congress could respond to the current, statutory FY2016 defense spending caps with various
approaches, including:
•
transferring funds from DOD’s base budget to OCO-designated accounts that are
not subject to caps, as proposed in the conference version of S.Con.Res. 11, the
FY2016 budget resolution;
•
reducing the President’s request by $38 billion or 5.6% through targeted cuts in
order to comply with BCA limits;
•
enacting some targeted cuts and relying on a small (1-2%, for example),
sequester to comply with BCA caps;
•
enacting the request and relying entirely on an across-the-board sequester to meet
BCA spending limits; or
55
§251(b)(2)(A) of the Balanced Budget and Emergency Deficit Control Act of 1985.
OMB, Statement of Administration Policy, ” S. 1376 – National Defense Authorization Act for FY 2016, June 2,
2015; https://www.whitehouse.gov/sites/default/files/omb/legislative/sap/114/saps1376s_20150602.pdf; see also,
OMB, Statement of Administration Policy, “H.R. 1735 – National Defense Authorization Act for FY 2016;”
“https://www.whitehouse.gov/sites/default/files/omb/legislative/sap/114/saphr1735r_20150512.pdf.
7
In its report, the Office of Management and Budget, responsible for reporting BCA spending limits, refers to the
initial caps as the “original limits,” and to adjustments to those limits as “Joint Select Committee on Deficit Reduction
Enforcement,” and the lowered or revised caps as “Revised Limits;” see OMB, Sequestration Preview Report to the
President and Congress for Fiscal Year 2016, February 2, 2015, p. 4-p.4; http://www.whitehouse.gov/sites/default/
files/
omb/assets/legislative_reports/sequestration/2016_sequestration_preview_report_president.pdf.
6
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Alternate Approaches to BCA Caps
Congress could respond to the current, statutory FY2016 defense spending caps with various
approaches, including:
•
transferring funds from DOD’s base budget to OCO-designated accounts that are
not subject to caps, as proposed in the conference version of S.Con.Res. 11, the
FY2016 budget resolution;
•
reducing the President’s request by $38 billion or 5.6% through targeted cuts in
order to comply with BCA limits;
•
enacting some targeted cuts and relying on a small (1-2%, for example),
sequester to comply with BCA caps;
•
enacting the request and relying entirely on an across-the-board sequester to meet
BCA spending limits; or
•
raising current defense and nondefense caps by some amount and complying
with those caps.
Congressional Choices
To help frame these choices about how to respond to the BCA revised or “sequester” caps on
defense spending, this report
•
explains congressional adjustments of the caps and Administration reactions;
•
describes the Administration’s position and DOD concerns;
•
analyzes defense spending levels in the FY2016 annual budget resolution;
•
places BCA caps in historical perspective;
•
outlines different types of savings that could help comply with the caps;
•
analyzes DOD’s current plan for compliance, and
•
describes budget uncertainties faced by DOD in responding to spending limits.
Adapting to BCA Spending Limits
BCA caps are set in terms of National Defense (budget function 050), of which DOD constitutes
about 95%.68 The story for DOD (budget function 051) follows the same lines as for National
defense. The discussion below focuses on National Defense; later sections focus on DOD, which
is the center of the defense spending debate.
Between FY2012 and FY2015, the gap between the Administration’s defense spending plans and
the BCA spending limits narrowed. Based on CBO’s estimate, the original BCA limits required a
8
Defense-related programs in the Department of Energy for nuclear weapons and the Department of Justice for
counter-terrorism make up most of the remainder.
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reduction to National Defense spending for the decade by about 14% or $860 billion compared to
continuing the FY2011 enacted level in real terms (steady-state spending with an adjustment for
inflation).79 CBO and OMB generally compare budget requests to a “current services” baseline
that reflects the prior year’s enacted level plus an adjustment for inflation.810
Compared to the President’s FY2012 budget plan submitted before passage of the BCA, BCA
caps would reduce defense spending for the base budget by $1.0 trillion or about 16%. This gap is
greater because the Administration’s FY2012 ten-year plan incorporated an annual average of just
below 1% growth for defense that was to be concentrated in the first three years.9
6
Defense-related programs in the Department of Energy for nuclear weapons and the Department of Justice for
counter-terrorism make up most of the remainder.
7
CBO, Letter from Douglas Elmendorf, Director to Speaker of the House John, Boehner and Majority Leader of the
Senate, Harry Reid, “CBO Estimate of the Impact on the Deficit of the Budget Control Act of 2011,” August 1, 2011;
http://www.cbo.gov/sites/default/files/cbofiles/ftpdocs/123xx/doc12357/budgetcontrolactaug1.pdf. The defense share is
half of the total reduction of $2.1 trillion over the decade. BCA limits are set at the budget function level, or National
Defense (budget function 050); the Department of Defense (DOD) makes up about 95% of that total.
8
When the BCA caps were enacted, CBO uses those statutory limits as its “baseline” estimate.
9
CRS calculation based on OMB, FY2012 Analytical Perspectives, Table 32-1; http://www.whitehouse.gov/sites/
default/files/omb/budget/fy2012/assets/32_1.pdf.
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11
By the FY2016 request, the savings gap—compared to the Administration’s ten-year plan—had
shrunk from 16% to 5%. This change resulted from a combination of raising caps in the American
Taxpayer Relief Act (ATRA, P.L. 112-240) and the Bipartisan Budget Act (BBA, P.L. 113-67) and
Administration decisions to submit lower defense budget plans. These actions
•
raised the spending limits for FY2013, FY2014, and FY2015 easing the year-toyear cuts required; and
•
reducing the savings needed by lowering defense spending plans in successive
budgets between FY2012 and FY2015.
While the adjustments in ATRA and BBA were significant in the near term, the reductions
themselves were modest for the decade, requiring $54 billion, or 1% less savings. The original
$1.0 trillion in defense savings needed compared to the FY2012 President’s budget plan became
$963 billion with these adjustments.1012
Raising Defense Spending Limits
Although ATRA retained the requirement for a sequester in FY2013, it reduced the amount from
$54.5 billion for defense to $42.5 billion. At the same time, ATRA softened the scheduled $62
billion cut between FY2012 and FY2013, splitting the reduction over two years rather than one.
Instead, ATRA mandated decreases of $36 billion in FY2013 and $20 billion the following year.
Congress left later years intact.
Signed by the President on December 26, 2013, the BBA raised the ATRA National Defense caps
for FY2014 from $498 billion to $520 billion, a $22 billion increase. For the following year, the
9
CBO, Letter from Douglas Elmendorf, Director to Speaker of the House, John Boehner and Majority Leader of the
Senate, Harry Reid, “CBO Estimate of the Impact on the Deficit of the Budget Control Act of 2011,” August 1, 2011;
http://www.cbo.gov/sites/default/files/cbofiles/ftpdocs/123xx/doc12357/budgetcontrolactaug1.pdf. The defense share is
half of the total reduction of $2.1 trillion over the decade. BCA limits are set at the budget function level, or National
Defense (budget function 050); the Department of Defense (DOD) makes up about 95% of that total.
10
When the BCA caps were enacted, CBO uses those statutory limits as its “baseline” estimate.
11
CRS calculation based on OMB, FY2012 Analytical Perspectives, Table 32-1; http://www.whitehouse.gov/sites/
default/files/omb/budget/fy2012/assets/32_1.pdf.
12
See OMB, Sequestration Preview Report to the President and Congress for Fiscal Year 2016, February 2, 2015, p.4;
http://www.whitehouse.gov/sites/default/files/omb/assets/legislative_reports/sequestration/
2016_sequestration_preview_report_president.pdf.
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BBA raised the earlier ATRA limit from $512 billion to $521 billion, a $9 billion increase. BCA
caps remained the same for FY2016 through FY2021.1113
Together these changes set defense spending at a nominal freeze (without adjustments for
inflation) between FY2013 and FY2016. (For more details, see Appendix B.)
Lowering Long-term Defense Spending Plans
While changing BCA caps reduced the gap between the pre-BCA Administration plans by a
relatively small amount, the lower defense budget plans submitted by the President narrowed the
gap by some $780 billion. These reductions reflect Administration and DOD decisions to reduce
force structure, slow modernization plans, propose compensation restraints, delay readiness
improvement plans, and adopt various efficiencies (see “DOD’s Plan for Complying with BCA
Limits”).
10
See OMB, Sequestration Preview Report to the President and Congress for Fiscal Year 2016, February 2, 2015, p. 4p.4; http://www.whitehouse.gov/sites/default/files/omb/assets/legislative_reports/sequestration/
2016_sequestration_preview_report_president.pdf.
11
See OMB, Sequestration Preview Report to the President and Congress for Fiscal Year 2016, February 2, 2015, p. 4p.4; http://www.whitehouse.gov/sites/default/files/omb/assets/legislative_reports/sequestration/
2016_sequestration_preview_report_president.pdf.
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From FY2013-FY2015, the gap between the Administration’s budget plans and the BCA caps
narrowed as the Administration incorporated additional savings into its plans. Figure 1 shows
how total funding requests for FY2012-FY2021 changed under successive President’s budgets for
National Defense. DOD funding levels changed in comparable ways.
•
The FY2013 budget fell by $519 billion from $6.4 trillion to $5.9 trillion; an
additional $497 billion in savings would be needed to comply with caps.
•
The FY2014 plan declined by another $93 billion to $5.8 trillion; requiring $372
billion more savings to comply.
•
The FY2015 plan decreased by another $188 billion to $5.6 trillion; requiring
$185 billion more in savings; and
•
The FY2016 budget remained at $5.6 trillion, requiring $185 billion more in
savings.12
14
13
See OMB, Sequestration Preview Report to the President and Congress for Fiscal Year 2016, February 2, 2015, p.4;
http://www.whitehouse.gov/sites/default/files/omb/assets/legislative_reports/sequestration/
2016_sequestration_preview_report_president.pdf.
14
CRS calculations based on OMB and DOD data, and CRS estimate of DOD’s share of BCA limits; includes the $26
billion separate request for DOD in the Administration’s Opportunity, Growth and Security Initiative (OGSI) fund.
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Figure 1. The BCA and Changes in National Defense Spending Plans
(in billions of dollars of budget authority)
Sources: OMB data shown in annual volumes of the Analytical Perspectives, and statutory language in the BCA,
ATRA, and the BBA.
With four of the ten years of the BCA limits completed, the gap between the FY2016
Administration plan for total defense spending and BCA limits now in effect has narrowed. Over
three-quarters of the savings needed are already incorporated in current Administration plans as
of the FY2016 budget. To close this gap for the six remaining BCA years, Congress would have
to reduce the Administration’s FY2016 plan by an average of 5.4% (Table 1).
12
CRS calculations based on OMB and DOD data, and CRS estimate of DOD’s share of BCA limits; includes the $26
billion separate request for DOD in the Administration’s Opportunity, Growth and Security Initiative (OGSI) fund.
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Defense Spending Complies with BCA Caps for FY2012-FY2015
By reducing the Administration’s request and with the FY2013 sequester required by the BCA,
National Defense spending (050) met BCA caps from FY2012 through FY2015, totaling
•
$552 billion in FY2012,
•
$518 billion in FY2013 (post-sequester),
•
$520 billion in FY2014, and
•
$521 billion in FY2015 (see Table 1).
After decreases in FY2012 and FY2013, the BCA limits set defense spending at a nominal freeze
for three years (the same spending level without adjustments for inflation) that would rise slightly
to $523 billion in FY2016. After that, defense spending is slated to rise by an average of $11
billion a year to $610 billion in FY2021, sufficient to cover expected inflation (Table 1).
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The BCA Spending Path and the FY2016 Request
This year, as in the past three years, President Obama proposed to raise caps for both defense and
nondefense and substitute “spending cuts, tax loophole closers, and program integrity measures
included in the Budget.”1315 Thus far, Congress has shown little interest in such a trade-off.
For National Defense, the President proposes raising the BCA cap by $38 billion in FY2016 to
match the request of $561 billion for the base budget. In later years, the President proposes to
raise defense caps by about $10 billion annually, reaching $610 billion in FY2021, $20 billion
above the current $590 billion statutory cap (Table 1).The President also proposes to extend the
caps from FY2021 through FY2025 with annual increases of $13 billion.
In FY2016, the gap between the BCA limit and the FY2016 President’s Budget (PB) request is
$38 billion, requiring a 6.8% reduction to avoid a sequester. The savings gap would gradually
decline to between 3% and 4% in later years although savings in earlier years could contribute to
those needed in later years. In real terms (converting all dollars to FY2016 purchasing power),
meeting the BCA caps would require an average decrease of 5% over the next six years (Table 1).
13
It is not uncommon for Congress to appropriate 5% less funding than requested by DOD. In the
63 years between FY1950 and FY2012, Congress provided DOD with 5% less than requested in
about one-quarter of the years. Smaller reductions of 3% to 5% occurred in 11 years, or another
18%. So over 40% of the time, DOD received appropriations of 3% to 5% below its request.16
Table 1. FY2016 President's Budget (PB) Plan and BCA Caps for National Defense
(in billions of dollars of budget authority and %)
Paths
Actuals
Budget Plan
National Defense (050)
Fiscal Year
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
Total:
12-21
Total
16-21
598
610
5,634
3,518
FY2016 and BCA Caps in Nominal Dollars
FY2016PB
555
518
520
521
561
573
584
592
15
See “In addition to cancelling the 2016 mandatory sequestration order and replacing the automatic mandatory
reductions required in future years, the 2016 Budget adjusts upward the 2016 through 2021 defense and nondefense caps from where they otherwise would be under Joint Committee reductions . . . [substituting] by a balanced
package of spending cuts, tax loophole closers, and program integrity measures included in the Budget;” on p. 8 of
OMB, Sequestration Preview Report to the President and Congress for Fiscal Year 2016, February 2, 2015;
http://www.whitehouse.gov/sites/default/files/omb/assets/legislative_reports/sequestration/
2016_sequestration_preview_report_president.pdf. 1315 For previous proposals, see “The President stands by the
compromise offer he made to Speaker Boehner in December 2012. This Budget includes all of the proposals in that
offer. These proposals would achieve nearly $1.8 trillion in additional deficit reduction over the next 10 years, bringing
total deficit reduction to $4.3 trillion. This represents more than enough deficit reduction to replace the damaging cuts
required by the Joint Committee sequestration” in Office of Management and Budget, FY2014 Budget,” Reducing the
Deficit in a Smart and Balanced Way,” ppp. 35-p.36; http://www.gpo.gov/fdsys/browse/collection.action?
collectionCode=
BUDGET&browsePath=Fiscal+Year+2014&searchPath=Fiscal+Year+2014&leafLevelBrowse=
false&isCollapsed=
false&isOpen=true&packageid=BUDGET-2014-BUD&ycord=0.
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It is not uncommon for Congress to appropriate 5% less funding than requested by DOD. In the
63 years between FY1950 and FY2012, Congress provided DOD with 5% less than requested in
about one-quarter of the years. Smaller reductions of 3% to 5% occurred in 11 years, or another
18%. So over 40% of the time, DOD received appropriations of 3% to 5% below its request.14
Table 1. FY2016 President's Budget (PB) Plan and BCA Caps for National Defense
(in billions of dollars of budget authority and %)
Paths
Actuals
Budget Plan
National Defense (050)
Fiscal Year
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
Total:
12-21
Total
16-21
FY2016 and BCA Caps in Nominal Dollars
FY2016PB
BCA
Capsa
555
518
520
521
561
573
584
592
598
610
5,634
3,518
555
518
16
Calculation by CRS based on congressional action on the DOD Appropriations bill in those years.
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Paths
BCA Capsa
Actuals
555
518
Budget Plan
520
521
523
536
549
562
576
590
5,451
3,336
FY2016PB less BCA Caps in Nominal Dollars
In $
0
0
0
0
38
37
35
30
22
20
183
182
In %
0.0%
0.0%
0.0%
0.0%
6.8%
6.4%
6.0%
5.1%
3.7%
3.3%
3.3%
5.4%
FY2016 and BCA Caps In FY2016 Dollars
FY2016PB
BCA
Capsa
583
542
536
530
561
563
563
559
554
554
5,546
3,354
BCA Capsa
583
542
536
530
523
527
529
531
534
536
5,370
3,180
FY2016PB less BCA Caps in FY2016 Dollars
In $
0
0
0
0
38
36
34
28
20
18
176
175
In %
0.0%
0.0%
0.0%
0.0%
6.8%
6.4%
6.0%
5.1%
3.7%
3.3%
3.1%
5.0%
Sources: OMB, “Policy Budget Authority and Outlays by Function, Category, and Program” Table in FY2013FY2016 Analytical Perspectives volumes of the budget, OMB, Table 10.1 in FY2016 Historical volume for GDP price
index, and Department of Defense, Table 2-1 in FY2016 National Defense Budget Estimates for adjustments to
exclude war spending, and OMB, Table 10.1 in FY2016 Historical volume for GDP price index.
Notes: CRS calculations on OMB and DOD documents. Reflects budget authority. CRS used the GDP price
index to convert nominal dollars into FY2016 dollars.
a.
BCA caps refers to spending limits as amended by ATRA and the BBA.
Much of this year’s debate on the FY2016 budget resolution focused on how to respond to BCA
caps for DOD. This debate about the appropriate level of defense spending in FY2016 and in later
years is likely to continue into the summer and fall as Congress considers the National Defense
Authorization Act (NDAA), and annual Department of Defense (DOD) and Military
Construction/Veterans Affairs appropriations acts.
14
Calculation by CRS based on congressional action on the DOD Appropriations bill in those years.
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This rest of this report analyzes BCA limits for DOD (051), which makes up the bulk of National
Defense and is the chief focus of congressional concerns. This report does not address nondefense
spending, which is subject to similar spending limits.1517
The Story for DOD
The story for DOD follows the same path as for National Defense. DOD’s reactions to BCA caps
have changed over time. With the submission of the FY2013 budget, DOD’s ten-year spending
plan for the BCA decade fell by $487 billion, and the needed to comply with BCA caps fell from
16% in the FY2012 budget to 9% (Figure 2). DOD suggested that this initial adjustment “is hard,
but manageable.”1618 Additional savings of $482 billion would be needed to meet BCA caps.
17
CRS Report R41965, The Budget Control Act of 2011, by Bill Heniff Jr., Elizabeth Rybicki, and Shannon M. Mahan
and CRS Report RL34424, The Budget Control Act and Trends in Discretionary Spending, by D. Andrew Austin.
18
Department of Defense, “Defense Budget Priorities and Choices,” p. 1, January 2012; http://www.defense.gov/news/
Defense_Budget_Priorities.pdf.
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Figure 2. Gap Between BCA Limits and DOD Plans Narrows
(in billions of dollars of budget authority and % of remaining years)
Sources: CRS calculations based on P.L. 112-75, P.L. 112-240, P.L. 113-67, and OMB Table 32-1, 31-1, and 28-1
in OMB's annual Analytical Perspectives to estimate DOD share of National Defense (050) total.
With the additional $90 billion savings incorporated in the FY2014 DOD plan, the gap between
the plan and the BCA as amended shrank to $331 billion over the next eight years of the BCA
decade. The savings gap fell from 9.4 % to 7.3%. DOD now warned that this change “led to
significant ongoing and planned reductions in military modernization, force structure, personnel
15
CRS Report R41965, The Budget Control Act of 2011, by Bill Heniff Jr., Elizabeth Rybicki, and Shannon M. Mahan
and CRS Report RL34424, The Budget Control Act and Trends in Discretionary Spending, by D. Andrew Austin.
16
Department of Defense, “Defense Budget Priorities and Choices,” p. 1, January 2012; http://www.defense.gov/news/
Defense_Budget_Priorities.pdf.
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costs, and overhead expenditures,” but that it still complied with the President’s strategic
guidance. 1719
The FY2015 DOD plan trimmed another $186 billion reducing the savings gap to about $175
billion, now requiring an additional 5.1% for FY2015-FY2021 to comply with BCA limits
(Figure 2).1820 DOD characterized this spending level as allowing “the military to protect and
advance U.S. interests and execute the updated defense strategy – but with somewhat increased
levels of risk for some missions.1921
In FY2016, BCA caps are slated to increase from $496 billion to $499 billion, and then to rise by
about $11 billion annually from FY2017-FY2021, reaching $563 billion in FY2021. DOD’s
FY2016 request of $534 billion exceeds the FY2016 cap by $36 billion and by $170 billion for
the remaining BCA years. The FY2016 Administration plan did not incorporate additional
savings, and the gap rose slightly to 5.1% or $165 billion (Figure 2 and Table 2).
19
DOD, Defense Budget Priorities and Choices, Fiscal Year 2014, p. 1, and p. 10, April 2013;
http://www.defense.gov/pubs/DefenseBudgetPrioritiesChoicesFiscalYear2014.pdf.
20
This figure includes the $26 billion requested for DOD in the Opportunity, Growth and Security Initiative fund.
21
Department of Defense, Fiscal Year 2015 Budget Request: Overview, Figure 1-1 and p.7-7, March 2014;
http://comptroller.defense.gov/Portals/45/Documents/defbudget/fy2015/fy2015_Budget_Request_Overview_Book.pdf.
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In its FY2016 Budget Overview, DOD argued that only the Administration’s plan would be
adequate to respond to recent geopolitical developments, including the Islamic State offensive,
the Ebola virus outbreak, and Russian actions in the Ukraine, and to execute the updated defense
strategy - but with somewhat increased levels of risk for some missions. . . [concluding that the]
QDR [Quadrennial Defense Review] strategy cannot be executed at sequester-levels of funding.2022
(For more detail, see Appendix C.)
Defense Department Concerns
Although Secretary of Defense Ashton Carter recently testified that DOD’s planned budget has
met over three-quarters of the savings needed to comply with the BCA, DOD now argues that
making the remaining reductions would have serious consequences.2123 In testimony about
potential effects of meeting BCA caps that would require a $36 billion decrease to DOD’s
request, and further reductions from their plan in later years, DOD witnesses contended that
complying with BCA caps would
•
jeopardize the military’s ability to carry out the national military strategy because
of cuts in force structure, and other changes;22
17
DOD, Defense Budget Priorities and Choices, Fiscal Year 2014, p. 1, and p. 10, April 2013;
http://www.defense.gov/pubs/DefenseBudgetPrioritiesChoicesFiscalYear2014.pdf.
18
This figure includes the $26 billion requested for DOD in the Opportunity, Growth and Security Initiative fund.
19
Department of Defense, Fiscal Year 2015 Budget Request: Overview, Figure 1-1 and p.7-7, March 2014;
http://comptroller.defense.gov/Portals/45/Documents/defbudget/fy2015/fy2015_Budget_Request_Overview_Book.pdf.
2024
•
delay reaching “full-spectrum” readiness, the broader training that prepares
troops for large-scale combat operations;
•
slow modernization efforts; and
•
exacerbate these problems if Congress rejects DOD proposals for compensation
and health care reform and other proposals that are incorporated in budget
plans.25
Table 2. FY2016 President's Budget Plan and BCA Caps for DOD
(in billions of dollars of budget authority and %)
Department of Defense (051)
Paths
Fiscal
Year
Actuals
2012
2013
Budget Plan
2014
2015
2016
2017
2018
2019
2020
2021
Total:
12-21
Total
16-21
FY2016 and BCA Caps in Nominal Dollars
22
DOD, “United States Department of Defense Fiscal Year 2016 Request Overview,” p.1-1, February 2015.
http://comptroller.defense.gov/Portals/45/Documents/defbudget/fy2016/FY2016_Budget_Request_Overview_Book.pd
f.
2123
Testimony by Secretary of Defense Ashton Carter before Senate Appropriations Committee, Subcommittee on
Defense, transcript, “President Obama’s Fiscal 2016 Budget Request for Defense, “ May 6, 2013.
2224
For a full discussion of DOD concerns about BCA caps and meeting the national military strategy, see DOD, 2014
Quadrennial Defense Review, March 4, 2014; http://www.defense.gov/pubs/2014_Quadrennial_Defense_Review.pdf;
see also statements by the Service Chiefs of Staff, Senate Armed Services Committee, Hearing, “Impact of the Budget
Control Act of 2011 and Sequestration on National Security;” http://www.armed-services.senate.gov/hearings/15-0128-mpact-of-the-budget-control-act-of-2011-and-sequestration-on-national-security.
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•
delay reaching “full-spectrum” readiness, the broader training that prepares
troops for large-scale combat operations;
•
slow modernization efforts; and
•
exacerbate these problems if Congress rejects DOD proposals for compensation
and health care reform and other proposals that are incorporated in budget
plans.23
Table 2. FY2016 President's Budget Plan and BCA Caps for DOD
(in billions of dollars of budget authority and %)
Department of Defense (051)
Paths
Fiscal
Year
Actuals
2012
2013
Budget Plan
2014
2015
2016
2017
2018
2019
2020
2021
Total:
12-21
Total
16-21
FY2016 and BCA Caps in Nominal Dollars
25
DOD, Overview: Fiscal Year 2016 Budget Request, p. 2-1ff, p. 6-5ff, passim, February 2015.
http://comptroller.defense.gov/Portals/45/Documents/defbudget/fy2016/
FY2016_Budget_Request_Overview_Book.pdf.
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Department of Defense (051)
FY2016PB
530
495
496
496
534
547
556
564
570
581
5,372
3,354
BCA
Limitsa
530
496
496
496
499
512
524
536
550
563
5,201
3,184
FY2016 President’s Budget (PB) Plan less BCA Caps
In $
0
0
0
0
35
35
33
28
20
18
170
170
In %
0.0%
0.0%
0.0%
0.0%
6.6%
6.4%
5.9%
5.0%
3.6%
3.2%
3.2%
5.1%
FY2016 and BCA Caps In FY2016 Dollars
FY2016PB
558
518
511
504
534
538
536
533
528
528
5,288
3,198
BCA
Limitsa
558
518
511
504
499
503
505
507
509
511
5,124
3,034
FY2016 President’s Budget (PB) Plan less BCA Caps in FY2016 Dollars
In $
0
0
0
0
35
34
31
27
19
17
164
163
In %
0.0%
0.0%
0.0%
0.1%
6.6%
6.4%
5.9%
5.0%
3.6%
3.2%
3.1%
4.9%
Sources: OMB, “Policy Budget Authority and Outlays by Function, Category, and Program” Table in FY2013FY2016 Analytical Perspectives volumes of the budget, OMB, Table 10.1 in FY2016 Historical volume for GDP price
index, and Department of Defense, Table 2-1 in FY2016 National Defense Budget Estimates for adjustments to
exclude war spending, and OMB, Table 10.1 in FY2016 Historical volume for GDP price index
Notes: CRS calculations on OMB and DOD documents. BCA caps are set for National Security. CRS estimated
the DOD share each year based on the Administration’s budget request that year using the OMB table above.
Reflects budget authority. CRS used the GDP price index to convert nominal dollars into FY2016 dollars.
a.
BCA caps refers to spending limits as amended by ATRA and the BBA.
After adapting to a nominal freeze in spending since the FY2013 sequester, DOD appears to be
particularly concerned about continuing that freeze for another year and then receiving average
annual increases of $11 billion through FY2021 that would more than cover inflation. Under BCA
23
DOD, Overview: Fiscal Year 2016 Budget Request, p. 2-1ff, p. 6-5ff, passim, February 2015.
http://comptroller.defense.gov/Portals/45/Documents/defbudget/fy2016/
FY2016_Budget_Request_Overview_Book.pdf.
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caps, DOD spending would rise from $496 billion in FY2015 to $499 billion in FY2016, and then
to $581 billion by FY2021 (Table 2).
During a hearing on the impact of sequestration, Chair of the Senate Armed Services John
McCain asked the Service Chiefs whether they would be able to execute the current 2014
Defense Strategic Guidance under “sequestration” or revised BCA caps. Each Service Chief
responded “no.” The service chiefs did not provide a list of those programs and activities that
would be cut as requested by the Chair.2426
Each of the witnesses provided some examples of the impact of potential cuts that would be
necessary, in their view, to reach BCA caps in FY2016 and later years. In 2014, DOD sent
Congress a report about how and where spending would be reduced to comply with caps but did
not explain how particular cuts would prevent the military from responding to potential military
crises envisioned in the national strategy (see “DOD’s Plan for Complying with BCA Limits”).
26
Senate Armed Services Committee, Statements and transcript,“Hearing on the Budget Control Act and
Sequestration,” January 28, 2015; Department of Defense, Quadrennial Defense Review, 2014; 3-4-14;
http://www.defense.gov/pubs/2014_Quadrennial_Defense_Review.pdf.
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Connecting defense funding levels and the national strategy is complex and depends on how and
where reductions are taken. There is a wide range of views on ways to reduce defense spending to
meet BCA spending limits and what the impact of those decreases would be (see Appendix D).
The FY2016 Budget Resolution and BCA Caps
This spring’s debate about the spending levels for defense in FY2016 and the next decade pitted
defense hawks, worried about the effect on defense of reductions necessary to comply with BCA
caps, against deficit hawks, concerned about increasing the deficit if BCA constraints are lifted.
As a result of concern over the effect on defense as well as preventing a sequester, the House and
Senate budget resolutions (H.Con.Res. 27 and S.Con.Res. 11) both recommended adding a total
of $96 billion for Overseas Contingency Operations (OCO), including $89 billion for DOD and
$7 billion for State Department/USAID programs.2527
This would add $38 billion to DOD’s $51 billion war request by designating funds requested in
its base budget as being for OCO. Since these additional OCO-designated funds would not count
against BCA caps, defense spending would be raised to the level requested without triggering a
sequester.2628
OCO-designated funds would rise from the $57 billion requested for the Afghanistan war and
new efforts to combat the Islamic State or ISIS to $96 billion (including the $7 billion for the
State Department). For DOD, OCO-designated funds would constitute 16% of the total rather
than the 8% requested (Figure 3).
24
Senate Armed Services Committee, Statements and transcript,“Hearing on the Budget Control Act and
Sequestration,” January 28, 2015; Department of Defense, Quadrennial Defense Review, 2014; 3-4-14;
http://www.defense.gov/pubs/2014_Quadrennial_Defense_Review.pdf.
25The conference version of the FY2016 budget resolution on S.Con.Res. 11 adopted this approach,
providing $523 billion for the National Defense base budget, complying with BCA caps, and
another $96 billion in OCO-designated funding for DOD and the State Department.29 The total
for defense was $1 billion above the President’s request.
While amounts in the budget resolutions are not binding, the House Appropriations Committees
adopted these figures in its 302(b) allocations that govern the markup of individual bills by their
subcommittees. The Senate Appropriations Committees has not yet published its 302(b)
allocations.30
27
See Table 3 and Table 4 in S.Rept. 114-14, and Table 1 in H.Rept. 114-47; see also §104, Functional Categories for
National Defense (050) and Overseas Contingency Operations (970) in the conference version of S.Con.Res. 11.
2628
Under budget law, OMB raises budget caps to accommodate funding designated as OCO. The $57 billion and $96
billion in OCO-designated funds include $50 billion for defense and $7 billion for the State Department in the request,
and the $96 billion includes $89 billion for defense and $7 billion for the State Department in the House and Senate
budget resolutions.
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The conference version of the FY2016 budget resolution on S.Con.Res. 11 adopted this approach,
providing $523 billion for the National Defense base budget, complying with BCA caps, and
another $96 billion in OCO-designated funding for DOD and the State Department.27 The total
for defense was $1 billion above the President’s request.
While amounts in the budget resolutions are not binding, the House Appropriations Committees
adopted these figures in its 302(b) allocations that govern the markup of individual bills by their
subcommittees. The Senate Appropriations Committees has not yet published its 302(b)
allocations.28
29
Conference agreement on S. Con., Res. 11 as printed in Congressional Record, April 29, 2015, Table 4, p. H2545.
30
The 302(b) allocation split amounts for DOD between the DOD and Military Construction/Veterans Affairs
subcommittees. See House Appropriations Committee, H. Rept. 114-, “Revised Suballocation of Budget Allocations
for Fiscal Year 2016,” May _, 2015, http://appropriations.house.gov/uploadedfiles/fy2016-revised302b.pdf. CQ/Roll
Call, “Senate Appropriators Launch Initial Work on Spending Bills,” by Tamar Hallerman, May 12, 2015;
http://www.cq.com/doc/4680825?0. The 302(b) allocation divides amounts for DOD between the DOD Appropriations
subcommittee and the other subcommittees.
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Figure 3. BCA Revised Caps and FY2016 Budget Resolutions
(in billions of dollars and % of total)
Sources: Bipartisan Budget Act, H.Con.Res. 27 as passed by the House, H.Rept. 114-47, S.Con.Res. 11 and
S.Rept. 114-14; and conference version of S.Con.Res. 11.
Notes: Figures include discretionary budget authority for base and OCO National Defense spending.
Secretary of Defense Ashton Carter, DOD Comptroller Michael McCord, and the service chiefs
all expressed concerns about providing DOD with a one-year increase using OCO-designated
funds, saying this approach was not a “sustainable” path, and therefore would not alleviate their
concerns.2931 A one-time spike, without assurances of longer-term increases, could complicate
27
Conference agreement on S. Con., Res. 11 as printed in Congressional Record, April 29, 2015, Table 4, p. H2545.
The 302(b) allocation split amounts for DOD between the DOD and Military Construction/Veterans Affairs
subcommittees. See House Appropriations Committee, H. Rept. 114-, “Revised Suballocation of Budget Allocations
for Fiscal Year 2016,” May _, 2015, http://appropriations.house.gov/uploadedfiles/fy2016-revised302b.pdf. CQ/Roll
Call, “Senate Appropriators Launch Initial Work on Spending Bills,”by Tamar Hallerman, May 12, 2015;
http://www.cq.com/doc/4680825?0. The 302(b) allocation divides amounts for DOD between the DOD Appropriations
subcommittee and the other subcommittees.
29
defense planning. OMB Director Shaun Donovan signaled the President’s opposition to this
approach, stating that the FY2016 budget resolution would
Damage national security by funding national defense with gimmicks in the near term, shortchanging it altogether in the long term, and singling out key non-defense national security
programs for deep cuts relative to the President’s budget. . . [and] As the Secretary of
Defense and the Chairman of the Joint Chiefs have explained, this is both bad budgeting and
harmful to military planning.32
Distinguishing Between Base and OCO Funds
Under budget law, spending is classified as for an “emergency” or OCO if
31
Inside Defense, “ Comptroller: $90B OCO Account Proposed in House Budget Blueprint ‘Not the Solution,” 3-24-15;
2415; http://insidedefense.com/defensealert/comptroller-90b-oco-account-proposed-house-budget-blueprint-not-solutionupdated; and Defense News, Ash Carter: House Budget Undermines Long-Term Planning
(continued...)
28
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defense planning. OMB Director Shaun Donovan signaled the President’s opposition to this
approach, stating that the FY2016 budget resolution would
Damage national security by funding national defense with gimmicks in the near term, shortchanging it altogether in the long term, and singling out key non-defense national security
programs for deep cuts relative to the President’s budget. . . [and] As the Secretary of
Defense and the Chairman of the Joint Chiefs have explained, this is both bad budgeting and
harmful to military planning.30
Distinguishing Between Base and OCO Funds
Under budget law, spending is classified as for an “emergency” or OCO if
, by Paul McLeary 4:33 p.m.
EDT March 26, 2015; http://www.defensenews.com/story/defense/2015/03/26/defense-budget-congress-carter/
70487034/.
32
OMB, Shaun Donovan, Director “Congressional Republican Budget Conference Agreement Cuts Programs that
Support the Middle Class, Working Families, and National Security,” April 30, 2015;
https://www.whitehouse.gov/blog/2015/04/30/congressional-republican-budget-conference-agreement-cuts-programssupport-middle-cl.
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•
•
Congress includes statutory language designating funds as emergency or OCO in
individual accounts; and
the President subsequently designates the funds, generally in a letter to Congress.
3133
If Congress and the President designate funds as “emergency” or “OCO” appropriations, then
OMB raises BCA limits to accommodate that funding.3234 This effectively exempts war funding
from the caps. Determining which funds are OCO-related is not necessarily based on particular
criteria but rather on whether both the congressional and executive branches have designated the
funding that way.
Both OMB and DOD issue budget guidance and regulations with criteria for what qualifies as
war-funding that are to be followed by DOD in developing their budgets. Once funding is
appropriated with an emergency or OCO-designation by both Congress and the President, the
funds are available to be spent regardless of their purpose.
Since the 9/11 attacks, both Congress and the President have designated as emergency or OCO
funding items that may not be consistent with guidance, for purposes ranging from childcare
centers to reorganizing the Army to funds transferred from DOD’s base budget request.3335
Amounts designated in defense appropriations acts as “emergency” or “OCO” have ranged from
(...continued)
By Paul McLeary 4:33 p.m. EDT March 26, 2015; http://www.defensenews.com/story/defense/2015/03/26/defensebudget-congress-carter/70487034/.
30
OMB, Shaun Donovan, Director “Congressional Republican Budget Conference Agreement Cuts Programs that
Support the Middle Class, Working Families, and National Security,” April 30, 2015;
https://www.whitehouse.gov/blog/2015/04/30/congressional-republican-budget-conference-agreement-cuts-programssupport-middle-cl.
31
about $2 billion to $12 billion, typically falling in the $6 billion to $8 billion range each year. In
FY2014, for example, Congress moved $9.2 billion in O&M funding requested in DOD’s base
budget to Title IX war funding where it was designated as OCO.36
Using OCO Funds as a Safety Valve
At the same time as DOD and Congress have been using OCO designations as a “safety valve”
for the base budget, some Members have raised concerns that war funding may be a “slush fund”
and have proposed stricter controls.37 One sign of a desire to place some constraints on use of the
OCO-designation was Section 409 included in the Senate-passed budget resolution (S.Con.Res.
11). Under that section, any Senator could raise a point of order on a provision in a bill, joint
resolution, amendment or conference report if the amount for OCO-designated spending
33
§251 (b)(2)(ii) of the Balanced Budget and Emergency Deficit Control Act of 1985 (BBEDCA) includes this
designation procedure. See also discussion in CRS Report RL33110, The Cost of Iraq, Afghanistan, and Other Global
War on Terror Operations Since 9/11, by Amy Belasco
32.
34
See, for example, Table 1 and pp.3-5 in OMB, “Final Sequestration Report to the President and Congress for Fiscal
Year 2015,” January 15, 2015; https://www.whitehouse.gov/sites/default/files/omb/assets/legislative_reports/
sequestration/sequestration_final_january_2015_president.pdf.
3335
See Table 5 and sections “War Funding and Budget Controls” in CRS Report RL33110, The Cost of Iraq,
Afghanistan, and Other Global War on Terror Operations Since 9/11, by Amy Belasco. DOD’s monthly Cost of War
reports have included a table listing all war-designated funding not tracked since FY2008. Presumably, DOD excludes
this funding in order to use actual experience to estimate future spending without including these funds.
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about $2 billion to $12 billion, typically falling in the $6 billion to $8 billion range each year. In
FY2014, for example, Congress moved $9.2 billion in O&M funding requested in DOD’s base
budget to Title IX war funding where it was designated as OCO.34
Using OCO Funds as a Safety Valve
At the same time as DOD and Congress have been using OCO designations as a “safety valve”
for the base budget, some Members have raised concerns that war funding may be a “slush fund”
and have proposed stricter controls.35 One sign of a desire to place some constraints on use of the
OCO-designation was Section 409 included in the Senate-passed budget resolution (S.Con.Res.
11). Under that section, any Senator could raise a point of order on a provision in a bill, joint
resolution, amendment or conference report if the amount for OCO-designated spending
36
Ibid.
37
Politico, “War budget might be permanent 'slush fund' “by Jeremy Herb and Bryan Bender, 3/24/15;
http://www.politico.com/story/2015/03/war-budget-might-be-permanent-slush-fund-116367.html; see also CRS Report
RL33110, The Cost of Iraq, Afghanistan, and Other Global War on Terror Operations Since 9/11, by Amy Belasco.
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exceeded $58.0 billion in FY2016 (the President’s request level) or $59.5 billion in FY2017. This
provision was dropped in the conference version of the resolution.3638
The House-reported version of the FY2016 budget resolution (H.Con.Res. 27), Section 513 also
appeared to reflect concerns about broad use of the OCO designation. It set up a “Deficit Neutral
Reserve Fund” for OCO and provided that any OCO-designated funds above $73.5 billion and up
to $94 billion could be provided only if offsets other than additional revenues were provided. In
other words, OCO-designated funding would be capped at $73.5 billion–below the $94 billion in
the reported version—unless the additional amounts were offset by reductions in other spending.
During floor consideration, the House dropped this provision and added $2 billion to its OCO
allocation in order to match the $96 billion included by the Senate.3739
An alternate approach would be to raise the BCA caps themselves. The conference version of
S.Con.Res. 11 included a Senate-proposed provision that would set up a “Deficit Neutral Reserve
Funds to Strengthen America’s Priorities” that would permit “enhanced funding for national
security or domestic discretionary programs provided such funding would not increase the deficit
over the period of the total of fiscal years 2016 through 2025.”3840 Such increases would have to be
“paid for” or offset by higher revenues or decreases in mandatory spending.
34
Ibid.
Politico, “War budget might be permanent 'slush fund' “by Jeremy Herb and Bryan Bender, 3/24/15;
http://www.politico.com/story/2015/03/war-budget-might-be-permanent-slush-fund-116367.html; see also CRS Report
RL33110, The Cost of Iraq, Afghanistan, and Other Global War on Terror Operations Since 9/11, by Amy Belasco.
36
FY2016 Budget Resolution and FY2016-FY2021 Caps
Another important role of the FY2016 budget resolution is to set a ten-year path for defense
spending for FY2016-FY2025. Compared to the BCA caps applying to the National Defense base
budget for FY2016-FY2021,
•
the House-passed resolution exceeded BCA caps by $229 billion;
•
the Senate version matched the caps;
•
the Conference would comply with BCA caps; and
•
the President’s budget request exceeded the caps by $182 billion (Table 3).
38
§409 in S.Con.Res. 11 as passed by the Senate gave the Chair of the Senate Budget Committee the prerogative to
decide whether a particular provision is subject to this point of order. Unless 60 Senators agree to waive the point of
order, the OCO-designated funds in a particular account would be struck, and the process could continue until funds did
not exceed the §409 limit. Senate Budget Committee, Draft Concurrent Resolution of the Budget for Fiscal Year 2016,
H.Rept. 114-0; http://www.budget.senate.gov/republican/public/index.cfm?a=Files.Serve&File_id=c7aa8422-0e7745db-964e-7676b22cdef0; and Concurrent Resolution on the Budget for Fiscal Year 23016, 114-111;
http://www.budget.senate.gov/republican/public/index.cfm?a=Files.Serve&File_id=5389a308-6d7b-45fc-b8e7e6db453eaf9a. For pre-conference, see CQ Roll Call, “GOP Hawks May Get Final Word on War Spending in Budget,”
by Paul M. Krawzak, 4-16-15.
3739
See H.Rept. 114-47, p. 150 and §513 in the House-reported version of H.Con.Res. 27; see also Function 970 in §102
of the House-passed version for the increase in OCO funds from $94 billion to $96 billion. According to press reports,
Senator McCain considered but decided against proposing an amendment to delete this point of order; Politico,” A
procedural requirement will make it hard for the Pentagon to ever get the extra money,” by Jeremy Herb and Seung
Min Kim, 3/23/15.
3840
§4302 in conference version of S.Con.Res. 11 and §302 in S.Con.Res. 11 as passed by the Senate.
35
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FY2016 Budget Resolution and FY2016-FY2021 Caps
Another important role of the FY2016 budget resolution is to set a ten-year path for defense
spending for FY2016-FY2025. Compared to the BCA caps applying to the National Defense base
budget for FY2016-FY2021,
•
the House-passed resolution exceeded BCA caps by $229 billion;
•
the Senate version matched the caps;
•
the Conference would comply with BCA caps; and
•
the President’s budget request exceeded the caps by $182 billion (Table 3).
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Table 3. FY2016 Budget Resolution and National Defense BCA Caps
(in billions of dollars of discretionary budget authority)
FY2016-FY2021 Totals
By Category
BCA Caps
Base
FY2016 PB
H.Con.Res.
27
S.Con.Res.
11
Conference
3,336
3,518
3,565
3,336
3,336
0
182
229
0
0
OCO-designated
—
193
231
231
380
Base and OCO Total
—
3,711
3,796
3,567
3,716
Base vs. Caps
Sources: H.Con.Res. 27, S.Con.Res. 11, and Conference version of S.Con.Res. 11, Table 28-1 in OMB, FY2016
Analytical Perspectives, February 2015;
https://www.whitehouse.gov/sites/default/files/omb/budget/fy2016/assets/28_1.pdf.
Notes: CRS calculations based on above; adjusts OMB’s FY2016 figures to exclude war request.
In terms of OCO-designated funds, both H.Con.Res. 27 as passed by the House and S.Con.Res.
11 as passed by the Senate exceeded the President’s request by the $38 billion requested in the
FY2016 base budget that the resolution proposes would be designated as OCO and hence exempt
from BCA caps (see earlier discussion). For the rest of the period, both the House and Senate
versions adopted the $27 billion placeholder for OCO-designated funds in the President’s FY2016
budget request, bringing the total for the BCA period to $231 billion compared to the President’s
request of $193 billion (Table 3).
In the conference version of S.Con.Res. 11, Congress proposes to increase the amount that would
be OCO-designated from $231 billion to $380 billion by including annual amounts from FY2016FY2021, $187 billion above the President’s request. OCO-designated funds would exceed the
request by
•
$38 billion in FY2016 and FY2017,
•
$36 billion in FY2018 and $31 billion in FY2018, and
•
$23 billion in FY2020 and $21 billion in FY2021.39
39
CRS calculations based on Conference version of S.Con.Res. 11 and Table 28 in OMB, FY2016 Analytical
Perspectives; https://www.whitehouse.gov/sites/default/files/omb/budget/fy2016/assets/28_1.pdf. .
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While the President recently modified the drawdown of U.S. troops in Afghanistan this year, the
goal to reduce to reduce U.S. troops in Afghanistan to an embassy presence of 1,000 by the
beginning of 2017 did not change.4042 For this reason, war funding is likely to decline in FY2017.
It appears that the FY2016 budget resolution may assume a continuation in later years of its
FY2016 proposal to transfer funds requested for the defense base budget to war funding. For the
FY2016-FY2025 decade, the FY2016 budget resolution is $178 billion below the President’s
Budget request for the base budget and exceeds that request by $196 billion for OCO-designated
funding (Figure 4).
41
CRS calculations based on Conference version of S.Con.Res. 11 and Table 28 in OMB, FY2016 Analytical
Perspectives; https://www.whitehouse.gov/sites/default/files/omb/budget/fy2016/assets/28_1.pdf.
42
The White House,”U.S.-Afghanistan Joint Statement,” March 24, 2015; https://www.whitehouse.gov/the-pressoffice/2015/03/24/us-afghanistan-joint-statement.
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The House-passed version of the FY2016 National Defense Authorization Act (H.R. 1735) also
moved $38 billion from the base budget request to funds to be designated as OCO.
Figure 4. National Defense Spending FY2016-FY2025, Base and OCO-Designated
(in billions of dollars of budget authority)
Sources: Conference version of S.Con.Res. 11, Table 28-1 in OMB, FY2016 Analytical Perspectives, February
2015; https://www.whitehouse.gov/sites/default/files/omb/budget/fy2016/assets/28_1.pdf.
Notes: CRS calculations based on sources above.
BCA Revised Caps in Historical Perspective
To put BCA caps in perspective, Figure 5 shows DOD appropriations for its base budget
(excluding wars) over the past seven decades expressed in FY2016 dollars so as to exclude
40
The White House,”U.S.-Afghanistan Joint Statement,” March 24, 2015; https://www.whitehouse.gov/the-pressoffice/2015/03/24/us-afghanistan-joint-statement.
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inflation. Since its previous low point, DOD’s base budget grew from $403 billion in FY1998 to
$567 billion in FY2010, its most recent high point in FY2016 dollars. Over that span, annual
defense spending grew by $164 billion or 41% in real terms (Figure 5).
After more than a decade of real growth, DOD spending began to decline under BCA limits from
its previous high point in FY2010 to a low point of $491 billion, a decrease of $76 billion or 13%
in real terms (all in FY2016 dollars). Critics of the BCA limits often make this comparison. After
FY2016, defense spending would grow by about $11 billion annually, enough to cover projected
inflation (Figure 5).
From a longer-term perspective, BCA spending limits place DOD’s base budget resources at
between FY2007 and FY2008 level in real terms, a relatively high level. Except for the 1985 peak
during the peacetime buildup under then-President Reagan, DOD spending has generally been
well below the FY2007 and FY2008 level, hovering closer to $400 billion annually (Figure 5).
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Figure 5. Department of Defense Spending: FY1950-FY2025
(in bllions of FY2016 budget authority)
Sources: Historical data from Table 5.1 in OMB, FY2016 Historical Tables; supplemental and emergency funding
for wars from DOD, Financial Summary Tables, Table 2-1 in DOD’s FY2016 National Defense Budget Estimates,
and other sources.
Buildups and Drawdowns in Defense Spending
Except for the peacetime buildup in the early 1980s during the presidency of Ronald Reagan,
defense base budget spending typically rises during wartime and falls for several years
afterwards. Much but not all of previous wars have been funded with emergency appropriations.
In the later stages of wars, funding has been included in the base budget in later years of the
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conflict.4143 For the Afghanistan and Iraq wars, funding has been consistently designated as either
emergency or for OCO (Figure 6). (This discussion uses DOD rather than National Defense
figures because of the focus on war funding.)
43
CRS Memo, “Funding for military contingency operations in the regular defense appropriations bills in the 1990s,”
by Stephen Daggett, April 6, 2005.
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Figure 6. DOD Spending Including Both Base Budget and Emergency/OCO
(in billions of FY2016 budget authority)
Sources: DOD and OMB historical data and budget projections.
Except for the Korean War, the Afghanistan and Iraq wars show a sharper buildup and shallower
drawdown. In real terms, total DOD spending (base and war) grew by 84% by FY2010, well
above the 54% increase during the Vietnam War and the 65% increase of the Reagan buildup.
DOD’s FY2016 plan projects a 23% drawdown, less than the 31% decrease after the Vietnam
War, and the 33% decrease after the Reagan buildup in response to the end of the Cold War
(Figure 6).
The Afghanistan, Iraq and new Islamic State or ISIS (Operation Inherent Resolve) wars have
been exclusively funded in supplemental emergency or OCO funds, which are not subject to
budget constraints. Some observers, DOD spokesmen among them, have acknowledged that some
war funding would more appropriately be part of its base budget.42
41
CRS Memo, “Funding for military contingency operations in the regular defense appropriations bills in the 1990s,”
by Stephen Daggett, April 6, 2005.
42
See CRS Report RL33110, The Cost of Iraq, Afghanistan, and Other Global War on Terror Operations Since 9/11,
by Amy Belasco.
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44
In recent years, DOD principals, as well as other policymakers, have called for distinguishing
base and OCO costs in order to help ensure more realistic choices about the long-term
affordability of DOD plans. One important step would be to distinguish temporary war-related
costs from long-term, enduring requirements, such as maintaining large numbers of military
personnel in the Central Command region that have been funded as war costs. DOD contends that
44
See CRS Report RL33110, The Cost of Iraq, Afghanistan, and Other Global War on Terror Operations Since 9/11,
by Amy Belasco.
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this transition “will not be possible if the sequester-level discretionary spending caps remain in
place.”4345
Transitioning longer-term “war” expenses to the base budget may be more difficult under budget
caps because it could crowd out other programs. At the same time, war funding, particularly for
procurement, has contributed to meeting base budget requirements over the past 14 years, often
earlier than planned. For example, the Army used war funding to modernize and upgrade almost
its entire armored vehicle fleet sooner than anticipated because of the additional wear and tear of
war operations.4446 For the same reason, depot maintenance of equipment has been carried out
earlier than planned. For these types of expenses, DOD’s OCO funding may, in fact, help reduce
future requirements, reducing pressure on the defense budget.
Trends in DOD Spending
DOD may also be concerned about BCA spending limits because the history of drawdowns shows
that typically, procurement accounts are tapped to adjust to overall reductions to protect
Operation and Maintenance (O&M), some of which funds the readiness of current forces.
Procurement is often called the “bill payer” and varies in consonance with overall increases and
decreases, signaling perhaps that there is more discretion to adjust the pace of modernization than
to make changes to ongoing training and support costs (Figure 5).
This role may also reflect DOD’s preference for delaying modernization during tight times
because it can be reversed fairly easily when more funding becomes more available, rather than
cutting force structure, perceived to be more difficult to restore. It may also reflect the relative
persistence of funding levels for O&M support activities, perceived to be largely “fixed” costs of
running military installations.
4345
DOD, United States Department of Defense Fiscal Year 2016 Request Overview, p. 7-1, February 2015.
http://comptroller.defense.gov/Portals/45/Documents/defbudget/fy2016/FY2016_Budget_
Request_Overview_Book.pdf.
4446
Stimson Center, Russell Rumbaugh, What We Bought: Defense Procurement from FY01 to FY10, October 28, 2011;
http://www.stimson.org/books-reports/what-we-bought-defense-procurement-from-fy01-to-fy10/.
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Figure 7.Trends in Types of DOD Spending in the Base Budget
(in billions of FY2016 dollars)
Sources: Calculated by CRS using OMB, Table 5.1 and Table 10.1 in FY2016 Historical Tables; OMB, FY2016
Historical Tables; https://www.whitehouse.gov/omb/budget/Historicals; totals adjusted to exclude emergency and
Overseas contingency Operations as shown in Table 2-1 and Table 7-5 in Department of Defense, Office of the
Under Secretary of Defense (Comptroller), National Defense Budget Estimates for FY 2016, March 2015;
http://comptroller.defense.gov/Portals/45/Documents/defbudget/fy2016/FY16_Green_Book.pdf.
Notes: In this figure, the total for DOD’s base budget is divided by estimated average strength for active-duty
forces; this calculation treats costs for reservists as part of overall costs for active-duty because of their support
role. Budget Authority is deflated by GDP price index for Defense in OMB, Table 10.1 in FY2016 Historical
Tables, converted from FY2009 to FY2016 dollars by CRS.
Different Types of Savings
While DOD believes that reductions to meet BCA caps would jeopardize its ability to meet the
national military strategy, other policymakers and observers have offered alternative perspectives.
Many think tanks, CBO, GAO, and other organizations have examined and proposed a wide
range of alternate ways to reduce defense spending.
Some proposals reflect different military strategies while others accept the current strategy but
propose different force structures. Others propose changes to military compensation,
modernization paths, and support activities. Proposals begin from different baselines, rest on
different rationales, could have different effects on programs, and provide different types of
savings (Appendix D).
While most studies focus on potential programmatic impacts, this report examines the timing,
duration, and pros and cons of different types of savings, specifically
•
temporary, short-term savings ;
•
recurring savings that continue and may grow over time;
•
savings from delay;
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•
saving requiring upfront investments;
•
efficiencies that reduce implementation costs; and
•
across-the-board sequester cuts.
In assessing savings proposals, it’s important to identify the baseline against which savings are
measured. For DOD, the baseline is its Future Years Defense Program (FYDP) including the
budget request plus four years, currently FY2016-FY2020. The President’s budget also sets a
“defense topline” or annual total for a ten-year period including the request. DOD’s budget
generally incorporates savings from proposed compensation or other reforms, which may require
congressional approval. The section below looks at the characteristics and the advantages and
disadvantages of each type of savings.
CBO’s steady-state baseline generally projects a spending path that continues the most recently
enacted level with an adjustment for inflation so as to provide the same level of resources. With
the requirement for “automatic reductions” required by the BCA since FY2013, CBO’s baseline
now reflects BCA caps.4547
Temporary or Short-Term Savings
During the FY2013 sequester, DOD adopted several changes to produce short-term, sometimes
temporary savings, with limited effects, and without necessarily changing goals or policies.
According to a GAO assessment, most DOD’s sequestration cuts were temporary including:
•
furloughing 650,000 civilian employees for six days in order to save $1.2
billion;4648
•
cancelling or shortening unit training for those units not preparing to deploy;
•
postponing planned depot maintenance of equipment or repair and non-urgent
renovations of facilities,;
•
reducing or delaying purchases of weapon system or modifications; and
•
delaying testing and development of weapon systems.4749
While some of these decisions—like cancelling training—resulted in lost training opportunities,
others—like depot maintenance or repair plans or letting weapon system contracts several months
later than planned—did not reflect policy decisions and had temporary effects. For longer-term
savings, DOD would need to make explicit decisions about the size of the civilian workforce, the
acceptable size of depot maintenance backlogs, or the size or scope of weapon system purchases
or R&D programs.
45
47
See Table 3-6 in CBO, Budget and Economic Outlook: Fiscal Years: 2014-2024, 2-4-14;
http://www.cbo.gov/sites/default/files/cbofiles/attachments/45010-Outlook2014_Feb.pdf.
4648
See Table 5 and p. 51 in GAO, Report to the Chairman, Committee on the Budget, House of Representatives, 2013
Sequestration: Agencies Reduced Some Services and Investments, While Taking Certain Actions to Mitigate Effects,
March 2014; http://www.gao.gov/assets/670/661444.pdf.
4749
GAO, Sequestration: Observations on the Department of Defense’s Approach in Fiscal Year
2013, GAO-14-177R,
Nov. 7, 2013); http://www.gao.gov/assets/660/658913.pdf.
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Designating Funds as OCO
Another source of savings that could prove to be temporary is the current proposal in the
conference version of the FY2016 budget resolution (S.Con.Res. 11 as passed by both houses)
that transfers base budget funds to OCO as a way to meet BCA spending limits and avoid a
sequester. OCO funding is expected to fall because of the President’s commitment to reduce U.S.
troops in Afghanistan to an “embassy” presence of about 1,000 by the end of 2016. 4850 Although
the President recently announced a delay of several months in the drawdown from 9,800 troops to
5,000 in FY2015, that change would not affect likely spending in FY2017.4951
Although there is no consensus about how long OCO-designated funds may continue, Defense
officials have opposed this budget resolution proposal because it gives them no confidence that an
increase in FY2016 would be continued in later years. A one-time spike would also be
inconsistent with DOD’s commitment to gradually “migrate” long-term, war-related costs to its
base budget if BCA caps are raised.5052
Recurring Savings Affect Later Years
In some ways, recurring savings may be the most beneficial type of savings because expenses are
lowered not only initially but in later years, and sometimes build up over time with full
implementation. Recurring savings would therefore reduce savings needed in later years.
Restraining Military Pay Raises and Compensation
Reducing annual military pay raises is a good example of recurring savings that decrease costs in
the short term as well as in later years. In FY2016, for the third year in a row, DOD proposed to
raise military pay by 1.3% rather than the 2.3% that would match the Economic Cost Index
(ECI), a labor index that sets pay raises unless adjusted by the President or Congress. DOD
estimates that this decision would save $700 million in FY2016 and $4.3 billion for FY2016FY2020 compared to its previous baseline that assumed ECI increases.51
4853
50
DOD, United States Department of Defense Fiscal Year 2016 Request Overview, p. 7-2 , February 2015.
http://comptroller.defense.gov/Portals/45/Documents/defbudget/fy2016/FY2016_Budget_Request_Overview_Book.pd
f; Inside the Pentagon, “July deadline missed, DOD Planning To Release OCO Budget 'Migration Guidance' This
Fall,” August 13, 2014; http://insidedefense.com/Inside-the-Pentagon/Inside-the-Pentagon-08/14/2014/dod-planningto-release-oco-budget-migration-guidance-this-fall/menu-id-148.html.
4951
The White House, “U.S.-Afghanistan Joint Statement,” March 24, 2015; https://www.whitehouse.gov/the-pressoffice/2015/03/24/us-afghanistan-joint-statement.
5052
Defense News, “Ash Carter: House Budget Undermines Long-Term Planning,” by Paul McLeary, March 26, 2015;
http://www.defensenews.com/story/defense/2015/03/26/defense-budget-congress-carter/70487034/; Inside Defense,”
Comptroller: $90B OCO Account Proposed In House Budget Blueprint 'Not The Solution,' “ March 24, 2015;
http://insidedefense.com/defensealert/comptroller-90b-oco-account-proposed-house-budget-blueprint-not-solutionupdated; Inside Defense, “COCOM Chiefs: Increasing OCO Funds Not Efficient Solution To Budget Problem,” March
19, 2015; Tuesday, March 24, 2015; http://insidedefense.com/node/168215; DOD, FY2016 Overview, p. 7-9.
5153
See Figure 6-3 in DOD, “Overview: Fiscal Year 2016 Budget Request,” February 2015.
http://comptroller.defense.gov/Portals/45/Documents/defbudget/fy2016/
FY2016_Budget_Request_Overview_Book.pdf. Although Section 1009 (c) of Title 37 provides an automatic annual
increase in basic pay, indexed to the ECI, the President can specify an alternate amount as he did in FY2014 and
FY2015; see p. 8 – p. 9 in CRS Report RL33446, Military Pay: Key Questions and Answers, by Lawrence Kapp and
Barbara Salazar Torreon.
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DOD’s larger package of compensation recommendations includes other ways to reduce current
and long-term costs by
•
limiting basic housing allowances;
•
reducing the commissary subsidy;
•
consolidating TRICARE, DOD’s health care system; and
•
reforming TRICARE by raising co-pays and requiring an enrollment fee from
military retirees for Tricare for Life.
DOD estimates that altogether, these compensation reform proposals would save $1.7 billion in
FY2016 and $25.4 billion for the FY2016-FY2020 period. These savings are incorporated in
DOD’s budget plan and therefore would not provide additional savings to meet the current gap
between BCA caps and DOD’s FY2016 request.5254
DOD’s proposals are a response to the expansion of military benefits and the awarding of pay
raises above the ECI over the past decade. Some observers say that restraint is appropriate at this
time because military personnel are currently paid more than 90% of the average pay of civilian
employees of comparable age and experience whereas the DOD goal is to match the pay of 70%
of equivalent civilians. Another sign that compensation is at least adequate is DOD’s success in
meeting or exceeding its recruiting and retention goals.5355 Slimmer pay raises also create
permanent savings by lowering the base to which later increases are applied.
The January 2015 recommendations of the Military Compensation and Retirement Modernization
Commission (MCRMC) call for revamping military retirement, providing military health care for
dependents and retirees through a system like that available to civilian government employees,
and changing “Quality of Life” programs like commissaries and childcare.5456 Because their
proposals were released after submission of DOD’s budget, these recommendations were not
taken into account in the FY2016 DOD request.
The Commissioncommission estimates that adopting its entire package of proposals would save $4.8 billion
in in
FY2016 and $7.1 billion annually by FY2017, with total savings of $31.8 billion for FY2016FY2020 (in FY2016 dollars).5557 If Congress were to adopt the Commissioncommission’s health care proposal,
some of DOD’s proposals might no longer be relevant, such as changes in co-pays. Other savings,
like DOD’s proposed TRICARE enrollment fee, are not included in the Commissioncommission’s proposals.
To calculate the savings, overlapping savings incorporated in DOD’s current budget could be
subtracted, and MCRMC savings would be substituted depending on the particular proposals
adopted by Congress.
5254
See Figure 6-3 in DOD, “United States Department of Defense Fiscal Year 2016 Request Overview,” February 2015.
http://comptroller.defense.gov/Portals/45/Documents/defbudget/fy2016/
FY2016_Budget_Request_Overview_Book.pdf.
5355
See discussion on p. 11-p.14 in CRS Report RL33446, Military Pay: Key Questions and Answers, by Lawrence Kapp
and Barbara Salazar Torreon; CBO, “Growth in DOD’s Budget from 2000 to 2014,” November 2014;
http://www.cbo.gov/sites/default/files/cbofiles/attachments/49764-MilitarySpending.pdf.
5456
Military Compensation Retirement Modernization Commission, Final report, p. 2, January 2015;
http://www.mcrmc.gov/public/docs/report/MCRMC-FinalReport-29JAN15-HI.pdf.
5557
These estimates are net savings, taking into account upfront costs. See Ibid. p. 255.
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Force Structure Savings Grow Over Time
Reductions in force structure—the size of military forces—create recurring savings that build up
over time and then continue indefinitely unless reversed. For example, in 2013, the Army decided
to draw down its forces by reducing the number of active-duty personnel from 490,000 to
450,000. This action lowers military personnel and Operating and Maintenance (O&M) costs as
fewer personnel need to be paid and supported with savings building up as personnel leave and
are not replaced. (Most savings estimates do not include potential procurement savings if weapon
system and support equipment buys were adjusted to reflect modernizing the equipment of the
same portion of the force as originally planned).
Recent Army budgets include but do not identify savings from this 40,000 decrease in the number
of active-duty strength that is to be achieved by FY2018. The rationale for the decrease is the
change in the President’s National Military Strategy, which calls for no longer preparing to
conduct long lasting ground wars.5658
Under the Army’s plan, the number of Brigade Combat Teams (BCTs) is slated to fall from 38 in
FY2014 to 30 in FY2016.5759 A CBO report estimates that annual savings per BCT could range
from $1.2 billion to $1.6 billion in military personnel and O&M funds, depending on the type.5860
Assuming an average of $1.4 billion for the eight brigade combat teams would yield annual
recurring savings of $11.2 billion after full implementation. (This estimate does not include
potential procurement savings.) While this type of savings has the advantage of contributing to
savings needed in later years, some would argue it has the disadvantage of not being quickly
reversible. Recent experience during the Afghanistan and Iraq wars has demonstrated that the
Army can, in fact, expand fairly quickly if necessary.
Smaller recurring savings would accrue as the services implement DOD’s initiative to decrease
headquarters costs (military and civilian personnel, contractors, facilities) by 20%, which is
expected to save $5 billion over the next five years. The rationale for this type of “efficiency”
initiative is that growth in headquarters staffing over the past decade was due primarily to the
Afghanistan and Iraq wars, and so could be trimmed as the wars wind down.59
5661
58
Department of Defense, “Defense Budget Priorities and Choices,” p. 1, January 2012; http://www.defense.gov/news/
Defense_Budget_Priorities.pdf.
5759
Department of the Army, Fiscal Year (FY) 2016 Budget Estimates, Volume I, Operation and Maintenance, Army,
Justification of Estimates, p. 1-p. 200, passim, February 2015; http://asafm.army.mil/Documents/OfficeDocuments/
Budget/budgetmaterials/fy16/opmaint//oma-v1.pdf. Department of the Army, Fiscal Year (FY) 2016 Budget Estimates,
Volume I, Military Personnel, Army; http://asafm.army.mil/Documents/OfficeDocuments/Budget/budgetmaterials/
fy16/milpers//mpa.pdf.
5860
See Figure 2-1 in CBO, Approaches for Scaling Back the Defense Department’s Budget Plans, p. 18, March 18,
2013; CBO defines “direct” costs as compensation and operational costs; indirect costs as those attributable to units
such as transportation and maintenance, and overhead costs, as those attributable to the services such as recruiting and
administrative support; http://www.cbo.gov/sites/default/files/cbofiles/attachments/43997_Defense_Budget.pdf. This
figure includes direct, indirect, and overhead costs.
5961
Department of Defense, Fiscal Year 2015 Budget Request: Overview, p. 1-2, 4-2, 7-12, March 2014;
http://comptroller.defense.gov/Portals/45/Documents/defbudget/fy2015/fy2015_Budget_Request_Overview_Book.pdf.
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Savings from Delay
Faced with making reductions, DOD often delays weapon system purchases by “stretching out”
programs, purchasing fewer units than planned in the near-term but generally retains the original
acquisition objective or total buy. What are the effects of program delays?
Critics argue that lower production rates are inefficient because per unit costs may be higher
when production rates are lower. The cost penalty depends on the stage of the program, the size
of the reduction, the amount of capacity established, and the potential for making adjustments.
Stretch-outs are also criticized for delaying improvements in capabilities and requiring the
services to rely on older systems for longer periods. Small decreases in quantity may yield
significant savings and at the same time, have limited effects on unit cost or capability.
An often-cited concern, recently voiced by some observers, is that production delays may create a
“bow-wave” or put pressure on overall procurement budgets in later years as peak production
rates for multiple major weapon systems converge. The likelihood of a “bow-wave” depends on
the plans and schedules for other major programs, as well as whether the services adjust longterm acquisition objectives in response to budgetary pressures.6062 Production plans often shift over
the ten-to-twenty-year acquisition cycles typical of major weapon systems in response to changes
in threats, technology, and budget.
The F-35 Joint Strike Fighter
A recent example of substantial savings from stretching out plans is the F-35 fighter aircraft
program, the largest weapon system program in terms of total cost in DOD history. The program
includes three different versions being built for the Air Force, Navy, and Marine Corps. Because
of management and technical problems, as well as spending limits, Congress has reduced the size
of F-35 purchases in the past four years.
Begun in FY2001, estimated procurement cost is now $338.9 billion (in FY2015$) to buy 2,457
F-35 aircraft over about 40 years—a 50% increase from the original estimate. Projected lifetime
operating and sustainment costs would add over $1 trillion to the total program cost.6163
A recent GAO assessment cites “significant cost and schedule growth, as well as performance
shortfalls,” due to the program’s concurrency where initial production occurs before
developmental testing is completed. GAO continues that concurrency can
increase the risk of design changes and cost of retrofits after production has started . . . one
practice that has perpetuated the unsatisfactory results that have persisted in acquisitions
through the decades.62
6064
62
See, for example, Inside Defense, “Kendall: Current Strategic Forces Modernization Plans Unaffordable without
Topline Relief,” April 14, 2015; http://insidedefense.com/defensealert/kendall-current-strategic-forces-modernizationplans-unaffordable-without-topline.
6163
See p. 83 in GAO-15-342SP, Defense Acquisitions: Assessments of Selected Weapon Programs, reissued on April 9,
2015; http://www.gao.gov/assets/670/668986.pdf; and p. 6 and p. 19 in CRS Report RL30563, F-35 Joint Strike
Fighter (JSF) Program, by Jeremiah Gertler. `
6264
GAO-15-342SP opcit, p. 54.
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This assessment, along with program office concerns about software development, engine and
aircraft durability, maintainability, and logistics information, has raised the issue of the
affordability of the program.6365
Between FY2012 and the FY2016 request, the number of F-35s to be purchased by all three
services fell from 217 in the FY2012 plan to 127 in the FY2016 plan, a decrease of 90 aircraft.
This 41% drop in quantity was coupled with 32% in savings, or $10.8 billion. While this change
reflects a dramatic change in production plans in the near-term, the effect on the overall program
is relatively small—a 6% slippage in the schedule (Table 4).6466
Table 4. Changes in F-35 Plans, FY2012 President’s Budget (PB) vs. FY2016PB
(in number of aircraft and billions of dollars)
Change in Overall
Program
FY12-FY15
President's Budget Plans
Quantity
$
Quantity To
Complete
$ to
Complete
Total Program
Total
$
FY2012
217
$33.7
2,017
$199.5
2,443
$269.0
FY2016
127
$23.0
1,895
$225.1
2,443
$318.0
Change in Quantity: FY16 v.
FY12
-90
-$10.8
-122
$25.6
0
$49.0
-41%
-32%
13%
0%
18%
Change in %: FY16 v. FY12
-6%
Sources: P-40 Exhibits for the F-35 aircraft in FY2012 and FY2016 DOD budget exhibits including F-35 A in
Aircraft procurement, Air Force, Joint Strike Fighter (STOVL) and Joint Strike Fighter (CV) in Aircraft
Procurement, Navy, and P-1 Exhibits for quantities.
Notes: Includes F-35 program for the Air Force (A), the Marine Corps (B) and the Navy © versions. Program
dollar values reflects Weapon system cost shown in P-40 exhibits, includes advance procurement, excludes initial
spares because data is not available for F-35Bs and F-35Cs in FY2016. This table does not include aircraft
purchased before FY2012.
Stretching out the F-35 program, with its multiple technical problems, could be attractive because
the additional time could help ensure that problems would be resolved before production is
ramped up, avoiding additional costly retrofits. The effects on future capability could be marginal
since technical problems would need to be resolved in any case. For other modernization
programs with high cost and technical risks, a decision to delay and stretch out production in
order to meet spending limits could be perceived as an acceptable risk. The case for savings by
delay could differ in cases where production is going smoothly.
Savings Requiring Upfront Investments
The closing of a military installation may offer a good example where eventual savings that
persist indefinitely require significant one-time, upfront costs. Shuttering a military installation
6365
Ibid. p. 84. Ibid. and CRS Report RL30563, F-35 Joint Strike Fighter (JSF) Program, by Jeremiah Gertler; see also
GAO-15-364, GAO, F-35 Joint Strike Fighter: Assessment Needed to Address Affordability Challenges, “Highlights,”
April 2015; http://www.gao.gov/assets/670/669619.pdf..
6466
Table 3 does not include aircraft bought in previous years.
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requires transferring military personnel, disestablishing and moving equipment and activities,
remediating environmental contamination, and possibly adjusting facilities elsewhere to receive
those activities that continue. Savings result primarily from reducing the number of military and
civilian personnel, as well as avoiding the need for upkeep of unnecessary infrastructure.
It may take several years before savings offset such implementation costs. Since 1988, DOD has
carried out five rounds of base closures. The first four rounds—in 1988, 1991, 1993 and 1995—
were designed to cut excess capacity created by the one-third drawdown in military personnel in
response to the end of the Cold War. DOD argued that savings from base closures should be
applied to meet other DOD modernization and readiness goals. In contrast, the 2005 round of
base closures was intended to consolidate bases in support of transformation. All rounds were to
be completed within six years and eventual savings were to exceed implementation costs.6567
For the fourth year in a row, DOD is pressing Congress to provide statutory authority for another
round of base closures, arguing that savings from eliminating an estimated 20% excess capacity
due to the ongoing downsizing of forces could be better spent to preserve critical DOD
programs.6668 In its FY2015 budget plan, DOD incorporated a total of $1.67 billion for FY2015FY2019 to support a FY2017 BRAC round, beginning with less than $10 million a year through
FY2017, and then rising to $590 million in FY2018 and $1.0 billion in FY2019.6769 In its FY2016
request, DOD included $10.5 million in FY2016 for initial studies.6870
Base closures are controversial because of the economic impact on communities, as well as the
difficulties in estimating future savings and implementation costs. Based on assessments of
experience with the first four rounds—where the rationale was savings rather than other DOD
goals—there appears to be fairly firm evidence that net savings can be expected. In 1998,
Congress required that DOD report the status of implementation costs and savings for the first
four rounds, and that CBO and GAO evaluate that report.6971
GAO Evaluation of Base Closure Savings
In its report, DOD found that for the first four rounds, its actual implementation costs was $22
billion, compared to its initial estimate of $23 billion. Based on a new analysis, DOD estimated
that savings for the first four rounds were likely to higher than originally estimated: $7.1 billion
rather than $5.7 billion annually.70
6572
67
DOD, The Report of the Department of Defense on Base Realignment and Closure, Required by Section 2824 of the
National Defense Authorization Act for Fiscal Year 1998, P.L. 105-85, April 1998 (hereinafter, DOD, Base Closure
Review, 1998); http://www.defense.gov/pubs/brac040298.pdf.
6668
DOD, Fiscal Year 2015 Budget Request: Overview, p. 2-4 to p.2-5, March 2014; http://comptroller.defense.gov/
Portals/45/Documents/defbudget/fy2015/fy2015_Budget_Request_Overview_Book.pdf.
67
DoD69
DOD, Base Realignment and Closure Fiscal Year (FY) 2015 Budget Estimates, March 2014, p. 8;
http://comptroller.defense.gov/Portals/45/Documents/defbudget/fy2015/budget_justification/pdfs/05_BRAC/
FINAL_FY15_BRAC_Summary_Book.pdf.
6870
DOD, Base Realignment and Closure Fiscal Year (FY) 2016 Budget Estimates, February 2015;
http://comptroller.defense.gov/Portals/45/Documents/defbudget/fy2016/budget_justification/pdfs/05_BRAC/
FINAL_Book_BRAC_Exec_Sum_FY2016.pdf.
6971
Section 2824 of the 1998 National Defense Authorization Act (P.L. 105-85).
7072
DOD, Base Closure Review, p. iv, p. 6, p. 8, p. 48, 1998; U.S. General Accounting Office. Military Bases: Review of
DOD’s 1998 Report on Base Realignment and Closure, p. 3, November 1998; http://www.gao.gov/assets/230/
226562.pdf. For example, DOD did not include long-term environmental remediation costs or offsetting savings from
(continued...)
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GAO questioned the accuracy of both DOD’s costs and savings estimates. Because of “data and
records weaknesses,” GAO characterized DOD’s estimates as
providing a rough approximation of costs and savings rather than a precise accounting.
DOD’s data systems do not capture all savings associated with BRAC actions, nor has DOD
established a separate system to track BRAC savings.7173
GAO also questioned the methodology of DOD’s new savings estimate as well as DOD’s
decision to apply savings in later budgets to other purposes, because this made the tracking of
savings difficult. GAO was also concerned because it was unclear whether military and civilian
positions were eliminated or personnel shifted to other tasks. DOD refers to such savings as “cost
avoidance” where new requirements are funded with other savings.
Nevertheless, GAO concluded that
These issues do not negate the fact that DOD can expect substantial savings from BRAC,
although they have had some effect on overall savings and, if included in DOD’s accounting,
would cause some increase in the time required for savings to fully offset costs. 7274
CBO Assessment
CBO did not attempt to verify DOD’s figures but agreed with GAO that implementation costs
could be somewhat higher because not all costs were included.7375 CBO voiced confidence in
DOD’s original savings estimate of about $5.0 billion annually (in 1999 dollars) but questioned
DOD’s new estimate. CBO, like GAO, noted the difficulty in segregating the effect on savings of
other actions that affect costs such as changes in workload, or other budget reductions.7476
Despite weaknesses in DOD’s estimates, CBO, like GAO, concluded that DOD’s report
provides rough but credible estimates of the total recurring savings from past BRAC rounds,
the aggregate level of excess capacity in the United States, and the potential savings from
future BRAC rounds.7577
Efficiencies: Definitions and Concerns
Defense “efficiency” savings are defined in different ways by different organizations,
policymakers, and observers. For example, a Stimson Center report counts as “efficiencies” not
only cuts to “overhead” or “back-office” functions but also changes to military compensation.7678 In
(...continued)
land sales or leases, which proved to be lower than anticipated.
7173
GAO/NSIAD-96-67, Military Bases: Closures and Realignment Savings Are Significant but not Easily Quantifiable,
p. 2, April 1996; http://www.gao.gov/assets/230/222465.pdf.
7274
U.S. General Accounting Office. Military Bases: Review of DOD’s 1998 Report on Base Realignment and Closure,
p.27, and p. 28-p. 30; see also GAO/NSIAD-97-67.
7375
CBO, “Review of the Report of the Department of Defense on Base Realignment and Closure,” July 1998;
http://www.cbo.gov/sites/default/files/brac98.pdf .
74.
76
CBO, “Review of the Report of the Department of Defense on Base Realignment and Closure,” p. 3, July 1998
75.
77
Ibid, p. 5.
7678
Stimson, “Managing the Military More Efficiently: Potential Savings Separate from Strategy,” passim, 5-13-13;
http://www.stimson.org/images/uploads/research-pdfs/Managing_the_Military_More_Efficiently.pdf.
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its Budget Overview, DOD also uses a fairly broad definition, with proposals ranging from
reducing management headquarters and enhancing competition for contracts to terminating and
restructuring weapon systems.7779
A CBO report defines “efficiencies” more narrowly as reducing the “cost of operations . . .
without eliminating or curtailing activities if more efficient ways of conducting operations could
be found.”7880 This definition focuses on savings from changing how an activity is carried out
without reducing services or benefits provided.
DOD identifies $188.5 billion in “efficiency” savings since enactment of the BCA. According to
its tally,
•
the FY2013 request included $60 billion in savings through FY2017;
•
the FY2014 request included another $35 billion in savings through FY2018;
•
the FY2015 request included $93.5 billion in savings through FY2019; and
•
the FY2016 request does not identify additional savings.7981
DOD’s FY2012 request, pre-dating the BCA, included another $178 billion in anticipated
savings, of which $100 billion were generated by the services and applied to other programs, and
$78 billion was produced by defense agencies and used to meet topline decreases. Unlike later
efficiency efforts, DOD identified savings in the budget year and planning period associated with
individual initiatives.8082 Because these savings were incorporated in DOD’s FY2012 budget plan,
they would not contribute to meeting BCA caps.
While DOD acknowledges the importance of pursuing efficiencies by “eliminating duplication,
reducing management headquarters and overhead, tightening personnel costs, enhancing contract
competition, terminating or restructuring weapons programs and consolidating infrastructure” to
reduce the ‘cost of doing business,’” it emphasizes that “The Department has learned from prior
drawdowns that it is impossible to generate all the needed savings just through efficiencies.”81
7783
79
Department of Defense, Fiscal Year 2015 Budget Request: Overview, passim, March 2014;
http://comptroller.defense.gov/Portals/45/Documents/defbudget/fy2015/fy2015_Budget_Request_Overview_Book.pdf
in DOD, United States Department of Defense Fiscal Year 2016 Request Overview, passim, February 2015.
http://comptroller.defense.gov/Portals/45/Documents/defbudget/fy2016/
FY2016_Budget_Request_Overview_Book.pdf.
7880
CBO Approaches for Scaling Back the Defense Department’s Budget Plans, p. 28, March 18, 2013;
http://www.cbo.gov/sites/default/files/cbofiles/attachments/43997_Defense_Budget.pdf.
7981
See p. 4-1 in Department of Defense, Fiscal Year 2015 Budget Request: Overview, passim, March 2014;
http://comptroller.defense.gov/Portals/45/Documents/defbudget/fy2015/fy2015_Budget_Request_Overview_Book.pdf;
and for lack of additional savings in FY2016, see DOD, United States Department of Defense Fiscal Year 2016
Request Overview, passim, February 2015. http://comptroller.defense.gov/Portals/45/Documents/defbudget/fy2016/
FY2016_Budget_Request_Overview_Book.pdf. See also, Opcit, CBO, Approaches, p. 28, 2013.
8082
Office Of the Under Secretary of Defense (Comptroller), Department of Defense, Department of Defense Efficiency
Initiatives, Fiscal Year 2012 Budget Estimates; http://comptroller.defense.gov/Portals/45/Documents/defbudget/
fy2012/FY2012_Efficiency_Justification_Book.pdf.
8183
Department of Defense, Fiscal Year 2015 Budget Request: Overview, p.1-2, and p.1-3, March 2014;
http://comptroller.defense.gov/Portals/45/Documents/defbudget/fy2015/fy2015_Budget_Request_Overview_Book.pdf;
and p. 1-3 in DOD, United States Department of Defense Fiscal Year 2016 Request Overview, passim, February 2015.
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Based on DOD’s tally of $188 billion in efficiency savings incorporated in its FY2013-FY2016
budgets plans, about 25% of the total decreases in DOD’s budget plans to meet BCA caps from
FY2012-FY2021 is expected to result from efficiencies. Because DOD has not presented the
savings for the budget and future years, it is difficult to identify the effects of these initiatives on
budget plans.
Concerns Raised About Efficiency Savings
Some observers have voiced skepticism about whether anticipated efficiency savings materialize,
citing not only the difficulty in tracking savings but also the commitment of military and civilian
managers, many of whom focus primarily on DOD’s core defense missions.8284 Acquisition
reforms, another type of efficiency savings, such as DOD’s “Better Buying Power” initiative, are
also notoriously difficult to track because of the multiple factors affecting weapon system costs.
Former Secretary of Defense Donald Rumsfeld testified in June 2001 that DOD, like any
“organization in the public or private sector,” could “by better management, operate, at least 5%
more efficiently if given the freedom to do so,” and so save $15 billion annually at that time.8385
Many other policymakers and think tank studies have estimated similar savings from a wide
range of efficiencies (Appendix D).
In evaluating proposed efficiency savings, it would be useful for Congress to receive the
following information in annual budget requests:
•
estimates of year-by-year savings in both dollars and personnel (military, civilian,
or contractor work-years);
•
tracking of those savings in previous and later years;
•
identification of those responsible for implementation;
•
potential obstacles to reaching savings;
•
adjustments to savings estimates as a result of experience; and
•
programmatic effects.
DOD’s FY2013 Sequester Experience
If Congress is not able to meet BCA caps, in whole or in part, the Defense Department would face
largely across-the-board sequestration cuts levied by OMB. Defense officials voiced alarm about
the effects of both the funding levels—deemed inadequate—and the sequestration process
itself—considered to be indiscriminate. The two issues are often conflated.84
8286
84
CSBA, Promoting Efficiency in the Department of Defense: Keep Trying, But Be Realistic, by Robert Hale, January
2002; http://www.csbaonline.org/wp-content/uploads/2011/03/2002.01.25-DoD-Efficiency.pdf.
8385
Secretary of Defense, Donald Rumsfeld, “Statement to House and Senate Armed Services Committees,” June 28.
2001; http://www.defense.gov/Speeches/Speech.aspx?SpeechID=384.
8486
Politico Pro, “The sequestration monster myth,” By Jeremy Herb, 4/12/15; http://politico.pro/1ynD964.
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It is not unusual for Congress to rely on small 1% to 2% across-the-board cuts to meet budgetary
limits.8587 Sequestration has raised greater concern because of the size of potential cuts. While a
small reduction may not appreciably affect programs, a reduction of 5% could make contract
plans more difficult to execute or force delays in planned activities. In FY2013, DOD was faced
with implementing a $37.2 billion sequester cut that was applied to $527.6 billion in budgetary
resources, an average cut of 7.1%. At the same time, DOD had more flexibility than expected in
how to apply cuts to particular programs and accounts.
How Sequestration Works
Budgetary law requires that fifteen days after the end of a congressional session OMB issues a
final sequestration report based on appropriations enacted at that time, which could be individual,
consolidated, or a continuing resolution appropriation act. To the extent that appropriations for
defense exceed the BCA revised cap for that fiscal year, the President is required to identify for
each account the amount to be sequestered.8688
Budgetary law requires that the same percentage cut be levied on individual program, projects,
and activities (PPAs). For investment programs (procurement and RDT&E), a PPA is defined as
an individual program (or program element) as identified in justification materials submitted to
Congress. For O&M activities, Congress has defined a PPA at the account level for each activeduty and reserve component, a much broader level. In addition, the President is allowed to
exempt Military Personnel accounts entirely.8789
In the case of defense spending, sequester cuts are applied to “total budgetary resources,” which
include
•
new Budget Authority (BA) for base funding in the current fiscal year,
•
new BA for funding designated as Overseas Contingency Operations/Global War
on Terror (OCO/GWOT),
•
unobligated balances (funds not yet under contract) from prior years for both
base and OCO funds, and
•
exemptions for military personnel accounts excluded by the President.8890
Predictions and Experience
Faced with the upcoming sequester, then-Deputy Secretary of Defense, Ashton Carter, issued
guidance to the services and defense agencies in January 2013. This guidance required DOD
components to begin implementing measures that will “help mitigate our budget execution risks”
by
•
fully protecting funding for wartime operations and Wounded Warrior programs;
8587
These are generally included in general provisions.
The caps are raised to accommodate funds designated as emergency or for Overseas Contingency Operations (OCO);
see Balanced Budget and Emergency Deficit Control Act of 1985 (BBEDCA), §251, § 254 (a) and (f).
8789
§255 (f), §258B, and 255 (f) of the BBEDCA.
8890
See §253(d), §255 (f) § 258B, and §256 (k) in the BBEDCA.
8688
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•
protecting “to the extent feasible” programs associated with the new strategy,
readiness programs, and family programs;
•
reducing the civilian workforce through a hiring freeze, releasing temporary
hires, and considering a furlough with mission-related exceptions;
•
protecting urgently required war-related investment and reviewing other
investment to avoid penalties associated with cancellations; and
•
curtailing lower priority programs such as base operations, facilities sustainment,
travel and training.8991
This action helped DOD to begin adjusting to the likely cuts before OMB’s order was issued on
March 1, 2013, and implemented on March 27, 2013.9092
While the services followed DOD guidance, its spokesmen testified to dire effects. The Air Force
predicted that one-third of its fighter and bomber force would be grounded, depot maintenance
backlogs would grow, and contract plans for weapon systems would be disrupted. The Army cited
drastic personnel cuts, and cancelled training exercises. DOD Comptroller Robert Hale stated that
effects on readiness would be devastating.9193
A year later, in its report on the effects of sequestration, GAO concluded that DOD’s guidance to
the services focused cuts on lower priority areas to limit readiness impacts, and that most of
DOD’s actions made short-term effects. For example, GAO found that
•
the Army curtailed training for units not scheduled to deploy;
•
the Air Force temporarily stopped training operations for combat forces but then
resumed in July 2013;
•
depot maintenance was deferred by the services;
•
installations deferred facility upgrades and delayed renewing contracts;
•
the services reduced and delayed weapon system and RDT&E contracts; and
•
civilians were furloughed for six days rather than the 22 days originally
expected.9294
Overall, GAO concluded that
8991
Deputy Secretary of Defense, Ashton Carter, “Handling Budgetary Uncertainty in Fiscal Year 2013,” January 10,
2013.
9092
§901(b) and (c) in P.L. 112-240.
9193
Army News, “Panetta: Severe cuts in ops if sequester occurs,” by Marcus Weisgerber, 1-10-13;
http://www.armytimes.com/news/2013/01/dn-panetta-says-severe-cuts-ops-sequester-011013/; Air Force,
“Sequestration Implementation Plan,” Briefing to Congress, 2-16-13; Yahoo.com, “Air Force Says Spending Cuts Hit
Combat Aircraft,” May 7, 2013. Yahoo.com, “Army Warns Of Steeper Reductions in Troop Numbers.” by Richard
Lardner, April 23, 2013; American Forces Press Service, “Hale: Sequestration Devastates U.S. Military Readiness,” by
Cheryl Pellerin, May 10, 2013.
9294
GAO, Report to the Chairman, Committee on the Budget, House of Representatives, 2013 Sequestration: Agencies
Reduced Some Services and Investments, While Taking Certain Actions to Mitigate Effects, p.78-p. 81, March 2014;
http://www.gao.gov/assets/670/661444.pdf.
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Generally, DOD’s approach to sequestration was a short-term response focused on
addressing the immediate funding reductions for fiscal year 2013. DOD was able to reduce
spending levels for the remainder of fiscal year 2013 without making permanent changes,
such as adjusting the size of its forces or canceling weapon systems programs.9395
Flexibility Available to DOD to Mitigate Sequestration
DOD had more flexibility than might be apparent in implementing sequester cuts because it could
•
draw on both new BA and unobligated BA from prior years;
•
tap war funding as well as its base budget;
•
exempt military personnel;
•
allocate cuts to O&M across an entire account; and
•
redirect funds to areas harmed by sequester through reprogramming.
In addition, the sequester was applied to the $527.2 billion appropriated for DOD, which was $2
billion above the request. The sequester amount also turned out to be lower than originally
because ATRA reduced the amount from about $53 billion to $41 billion. That amount was
further reduced by $3.7 billion to $37.2 billion because of a provision in budgetary law that
permits “credits” in those cases when final appropriations are below the post-sequester amount in
the sequestration order. 9496
At the same time, the FY2013 sequester was difficult to implement because the sequester cut of
$37.2 billion required a 7.1% average cut to total budgetary resources.9597 In addition, the sequester
order was issued on March 1, 2013, halfway through the fiscal year when a continuing resolution
was still in effect, increasing uncertainty.
DOD had more flexibility because it could draw on three sources of funds: unobligated balances
from prior years ($62.2 billion), new BA for the base budget ($392.4 billion in base budget
funding excluding military personnel accounts); and funds designated as Overseas Contingency
Operations ($73.0).9698 Sequester cuts were taken from all three sources for each individual
9395
GAO-14-177R, Sequestration: Observations on the Department of Defense’s Approach in Fiscal Year 2013, p. 3,
Nov. 7, 2013); http://www.gao.gov/assets/660/658913.pdf.
9496
For original estimate, OMB, Report Pursuant to the Sequestration Transparency Act of 2012 (P.L. 112-25), p. 7,
September 14, 2012; http://www.whitehouse.gov/sites/default/files/omb/assets/legislative_reports/stareport.pdf; see
§253(f) in the BBEDCA; amount provided by OMB. OMB was required under ATRA to calculate the sequester on
March 1, 2013 based on an annualized level of the Continuing Resolution in effect at the time. Sec. 253(f) of the
Deficit Control Act of 1985 provides that if the final enacted level is below the post-sequester amount in the order, then
the agency receives a “credit” for savings in excess of sequester savings. For example, if the final appropriation was
$90, and the post-sequester amount as calculated was $100, then DOD received a “credit” of $10 applied to the
sequester total. OMB data identify $3.7 billion in DOD credits that reduced the sequester to $37.2 billion. Amount of
credit provided by OMB. See also, Department of Defense, Office of the Under Secretary of Defense (Comptroller),
Department of Defense Report on the Joint Committee Sequestration for Fiscal Year 2013, June 2013;
http://comptroller.defense.gov/execution/Sequestration/Unclassified_Published_Sequestration_Final.pdf.
9597
Table 1 in GAO-14-177R.
9698
Amounts from DOD table provided to CRS. For exemption of military personnel, see Acting Director of OMB,
Jeffrey D. Zients to Speaker of the House, John H. Boehner, “Notification letter to exempt military personnel from a
sequester, July 31, 2012.” Figures from table provided to CRS by DOD. Unobligated BA is available from DOD
procurement, Research, Development, Testing & Evaluation (RDT&E), and Military Construction funds are available
(continued...)
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procurement or RDT&E program and each O&M account, with individual cuts targeted to areas
where funding was less needed.
Table 5. Implementation of DOD’s FY2013 Sequester
(in billions of dollars of budget authority and %)
Category
FY2013 New BAa
Prior Year
Unobligated Balancesb
Totalb
Available Resources
Base
$392.4
$56.0
$448.4
OCO
$73.0
$6.2
$79.2
Total
$465.4
$62.2
$527.6
Sequester Cuts
Base
-$26.2
-$5.8
-$32.0
OCO
-$4.8
-$0.4
-$5.3
Total
-$31.0
-$6.2
-$37.2
% Sequester Cut
Base
-6.7%
-10.3%
-7.1%
OCO
-6.6%
-7.0%
-6.7%
Total
-6.7%
-10.0%
-7.1%
Source: CRS analysis of table provided by Office of the Secretary of Defense, Comptroller, showing allocation
of sequester reductions by account, by base and OCO, and by new BA and unobligated balances, November 24,
2014.
Notes:
a.
New BA or Budget Authority refers to funds appropriated by Congress for the upcoming fiscal year.
b.
Unobligated balances are BA appropriated in previous years that has not yet been obligated, i.e., put on
contract.
DOD discriminated in how much it drew from each source. To reach the sequester amounts, DOD
took a 10% cut to unobligated balances compared to a 6.7% cut to new BA appropriated in
FY2013. This enabled DOD to protect new BA that would be available for a longer period of time
than old BA appropriated in prior years. DOD often reprograms unobligated balances for new
requirements when those funds are close to the end of their life and may lapse and be returned to
the Treasury (Table 5).
Somewhat surprisingly, in light of guidance to protect funding related to combat operations, DOD
cut its OCO-designated accounts by the same percentage as its base funding—by 6.7% (Table 5).
It is not unusual for a certain amount of war funding to lapse.9799
(...continued)
to be obligated for two, three, and five years respectively; in other words, contracts can be written for goods or services
over that period of years, often called the “life” of the funds.
9799
See CRS Report RL33110, The Cost of Iraq, Afghanistan, and Other Global War on Terror Operations Since 9/11,
by Amy Belasco.
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The decision to take larger amounts from unobligated balances helped shield new BA for
procurement, which was cut by 3.0%. The benefit to RDT&E account was less, presumably
because the pool of unobligated balances was smaller.
O&M accounts, available only for one year, could not be shielded in this fashion. And while
military personnel accounts were protected, this increased cuts to other spending. New BA for
Military Construction and Family Housing accounts were not protected, and cut by 16% (Table
6). Overall, new BA shown in Table 5 was cut by 4.7% compared to an overall cut of 7.1 % to
total defense budgetary resources.
Table 6. Sequester Cuts by Type of Spending
(in billions of dollars of budget authority and %)
FY2013 Base Budget
Request
Seq. Cut to new
FY2013 BA
Seq. Cut in %
vs. Request
Military Personnel
$135.1
$0
0.0%
Operation and Maintenance
$208.8
-$14.8
-7.1%
Procurement
$98.8
-$3.0
-3.0%
RDT&E
$69.4
-$5.4
-7.8%
Revolving Funds and Other
$2.1
$0.1
4.7%
Military Construction
$9.6
-$1.5
-16.0%
Family Housing
$1.7
-$0.1
-7.5%
$525.4
-$24.5
-4.7%
Title
DOD Total
Source: CRS calculations based on data provided by DOD.
DOD’s Plan for Complying with BCA Limits
How might DOD meet BCA reductions to their current plan? According to DOD, BCA reductions
over the past four years were met by
•
efficiencies achieved through “more disciplined use of defense dollars” (better
contracting and reducing overhead),
•
changes in force structure (e.g., reducing the size of the Army to reflect a reduced
likelihood of long ground wars),
•
slowing modernization,
•
restraining military pay raises, and
•
modification of health care benefits.98
98100
100
Department of Defense, Defense Budget Priorities and Choices, passim, January 2012; http://www.defense.gov/
news/Defense_Budget_Priorities.pdf.
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In April 2014, DOD submitted a report that described the programs and activities that DOD
would cut to meet the $115 billion decrease from the FY2015 request to comply with BCA caps
from FY2015-FY2019.99101 Based on this plan, DOD concluded that if
sequestration-level cuts [BCA spending limits] persist, our forces will assume substantial
additional risks in certain missions and will continue to face significant readiness and
modernization challenges. These impacts would leave our military unbalanced and
eventually too small to meet the needs of our strategy fully.100102
DOD’s report anticipates enactment of its FY2015 request, which complied with BCA caps.101103 To
meet the spending limits, DOD programs and activities would have to be cut by 4.3% or $115
billion from FY2016 through FY2019. DOD did not address FY2020 and FY2021, the last two
years of the BCA limits because they were outside their planning window. 102104
As is often the case with changes to DOD spending levels, DOD’s plan generally distributes BCA
cuts in proportion to the each service’s share of the budget:
•
23% for the Army,
•
30% for the Navy and Marine Corps,
•
31% for the Air Force, and
•
16% for defense-wide agencies.
Over the five-year period, each service would be cut close to the overall average of 4.3%, with
slightly greater cuts to the Air Force and slightly lower cuts to Defense-wide (Table 7).
Some observers might expect different shares in light of the new strategy deemphasizing ground
wars and projecting a greater role of the Navy in the pivot to Asia. Others might expect a greater
emphasis on cutting defense agencies, which are perceived as performing primarily “overhead”
functions that would receive lower priority in tight times. DOD might argue that it had already
taken efficiency cuts that could affect defense agencies, as well as proposed health care savings
funded in the defense-wide accounts, some of which Congress adopted.
99101
This period covers DOD’s Future Years Defense Program (FYDP) as of the FY2015 budget request.
Department of Defense, “Estimated Impacts of Sequestration-Level Funding: U.S. Department of Defense Fiscal
Year 2015 Budget Request,” p. 1-2, April 2014; hereinafter, DOD, Estimated Impacts; http://www.defense.gov/pubs/
2014_Estimated_Impacts_of_Sequestration-Level_Funding_April.pdf; hereinafter, DOD, Estimated Impacts, April
2014.
101103
This does not include additional funds requested for DOD separately in the Opportunity, Growth, and Security
Initiative account.
102104
Ibid. p. 2-1; the FY2015 request complies with BCA caps if the additional $26 billion requested for DOD in a
separate Opportunity, Growth, and Security Initiative (OGSI) is excluded: Congress did not address the OGSI request.
100102
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Table 7. DOD's Savings Plan for FY2015-FY2019 By Service
(in billions of dollars and %)
FY2015-FY2019
Service
DOD Plan Total
Total Caps Cuts
% Cut
Service Shares of
From DOD Plan
FY15-FY19
Total
BCA Cuts
Army
$637.4
-$26.4
-4.1%
24%
23%
Navy
$798.0
-$34.6
-4.3%
30%
30%
Air Force
$760.6
-$36.2
-4.8%
28%
31%
Defense-wide agencies
$488.9
-$18.0
-3.7%
18%
16%
-$115.0
-4.3%
100%
100.0%
TOTAL
$2,685
Source: Department of Defense, “Estimated Impacts of Sequestration-Level Funding: U.S. Department of
Defense Fiscal Year 2015 Budget Request,” April 2014; http://www.defense.gov/pubs/
2014_Estimated_Impacts_of_Sequestration-Level_Funding_April.pdf.
Notes: CRS analysis of data in tables on p. 2-1 in report above. DOD assumes no cuts to its FY2015 request.
DOD’s Plan Emphasizes Modernization Cuts, Protects Support
Activities
Unlike the proportional shares in cuts for each service shares, DOD’s plan calls for cuts to
investment accounts (Procurement, RDT&E, and Military Construction/Family Housing) that
fund modernization that are twice their share of the budget. At the same time, Personnel and
Support activities (Military Personnel and Operation & Maintenance), which comprise two-thirds
of the budget, would take one-third of the cuts (Figure 8).103
103105
105
DOD, Estimated Impacts.
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Figure 8. DOD Budget and BCA Cuts: FY2015-F2019
(as % of total)
Sources: Department of Defense, “Estimated Impacts of Sequestration-Level Funding: U.S. Department of
Defense Fiscal Year 2015 Budget Request,” April 2014; http://www.defense.gov/pubs/
2014_Estimated_Impacts_of_Sequestration-Level_Funding_April.pdf.
While the FY2015-FY2019 total of $928 billion for investment would be cut by 8%, the $1.8
trillion in Personnel, Operations, and Support would be cut by 2% (Table 8).
Table 8. DOD’s BCA Savings, FY2015-FY2019, Modernization vs. Personnel
Operations, and Support
(in billions of dollars and %)
Total FY2015-FY2019
Appropriation Title
DOD Plan Total
Total Caps Cuts
Investment
$928
-$72.4
-8%
Procurement
$550
-$48.3
-9%
RDT&E
$337
-$17.9
-5%
$42
-$6.2
-15%
$1,756
-$42.8
-2%
$678
-$2.7
0%
O&M/Family Housing
$1,078
-$40.1
-4%
TOTAL
$2,685
-$115.2
-4%
Mil.Con./Family Housing
Personnel, Operations, & Support
Mil. Personnela
% Cut
Sources: Department of Defense, “Estimated Impacts of Sequestration-Level Funding: U.S. Department of
Defense Fiscal Year 2015 Budget Request,” April 2014; http://www.defense.gov/pubs/
2014_Estimated_Impacts_of_Sequestration-Level_Funding_April.pdf.
Notes: CRS analysis of data in table on p. 2-2 of report above. DOD assumes no cuts to its FY2015 request.
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DOD’s emphasis on meeting BCA caps primarily by slowing modernization is only one of a
number of ways to achieve the BCA savings necessary to avoid sequesters. In a March 2013
report, the Congressional Budget Office outlined four different options to achieve BCA savings,
each with different emphases:
•
Preserve force structure and take equal cuts from acquisition (modernization) and
operations (general operations and civilian pay);
•
Split cuts between force structure, phased-in, and acquisition and operations;
•
Cut primarily force structure; or
•
Cut primarily force structure but shift timing of BCA caps.104106
Other scenarios—with a different mix of reductions—would, of course, be possible, with
Congress ultimately making the decisions each year about where and how to change defense
programs and activities to comply fully or partly with current BCA spending limits.
Potential Changes in Army Force Structure
The main force structure cut due to BCA limits in DOD’s report would be a decrease in the
number of active-duty Army combat brigades from the 29 currently planned for FY2016 to 24 in
FY2019. This would entail a decrease of 30,000 in the number of active-duty military personnel
from 450,000 in FY2017 to 420,000 in FY2019. According to DOD’s report, this reduction would
be
reviewed further in subsequent budget cycles. If Congress acts to support the out year PB15
[President’ Budget for FY2015] topline, the Department will maintain the Army at a force of
970-980K (440-450K Active, 335K National Guard and 195K Reserve). 105107
The report does not identify the associated savings, which could be roughly $6 billion once fully
implemented.106108 DOD’s FY2016 request does not comply with BCA caps or include this change.
Army leadership has strongly objected to cutting active-duty personnel to 420,000 stating that
450,000 active duty is the “smallest acceptable force to implement the defense strategy” and that
a 420,000 soldier active force provides “insufficient capacity; cannot implement defense
strategy.” 107109 Despite the high priority given by the Army to retaining its current force structure
plan, DOD’s report says additional Army military personnel would be cut under BCA limits.
104106
CBO Approaches for Scaling Back the Defense Department’s Budget Plans, Summary Figure 2 and p. 3-p.6, March
18, 2013; http://www.cbo.gov/sites/default/ files/cbofiles/attachments/43997_Defense_Budget.pdf.
105107
See DOD, Estimated Impacts, p. 3-1, April 2014. The report states “Army force structure is shown in Figure 3-1.
There would be no changes from PB15, as submitted, to BBA/BCA [under sequester cap limits]. “
106”
108
This is a rough estimate relying on CBO factors.
107109
See Figure 3-1 in Department of Defense, “Estimated Impacts,” p. 1-2, April 2014. For Army position, see Army
Briefing, “Army Force Mix: Least Risk, Best Value,” January 6, 2014, p. 5 as quoted in CRS Report R42493, Army
Drawdown and Restructuring: Background and Issues for Congress, by Andrew Feickert.
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DOD’s Approach to Modernization Cuts
Each of the Service Chiefs voiced considerable concerns about the effects of BCA funding limits
on modernization, including both the adequacy of total investment spending and the effects on
individual weapons systems.108110 DOD’s plan appears to give greater priority to shielding RDT&E,
particularly science and technology, than procurement from reductions. Cuts to procurement
would be 9% compared to 4% for RDT&E.
Shares of cuts and the investment total were not proportional. While RDT&E programs took 16%
of the cuts, it made up 30% of investment funds. Procurement accounted for 84% of the cuts and
made up 70% of the investment total. Within RDT&E, science and technology, DOD protects its
basic research programs by levying smaller cuts (-3%) than in programs dedicated to the
development of specific weapons (-6%) (Table 9).109111
Among procurement programs, combat systems, munitions, and communications and electronics
to arm and support those systems would be cut by 8% to 9% whereas support to weapon
systems—maintenance, training and support, modifications for upgrades and spare and repair
parts—would be cut by 6%. An undefined “other” account would be cut more heavily, by 17% or
almost twice its overall share of investment programs (Table 9).
Table 9. DOD's Plan for Achieving BCA Modernization Savings, FY2015-FY2019:
RDT&E and Procurement
(in billions of dollars and %)
FY15-FY19
Plan $ as of
FY15PB
FY15-FY19
$ Cuts
% Cut
Shares of
Plan
Cut Shares
RDT&E Total
$264.1
-$10.8
-4%
30%
16%
Systems Developmenta
$203.6
-$9.2
-5%
23%
14%
Technologyb
$60.5
-$1.6
-3%
7%
2%
Procurement Total
$622.6
-$55.4
-9%
70%
84%
$218.0
-$17.8
-8%
25%
27%
$94.6
-$8.5
-9%
11%
13%
Maintenance, Training & Support,
Modifications and Spares and Repair
Partse
$162.3
-$9.2
-6%
18%
14%
Nondefense and Other
$147.7
-$19.9
-13%
17%
30%
TOTAL
$886.7
-$66.2
-7%
100%
100%
INVESTMENT CATEGORY
Science &
Combat
Systemsc
Munitions, Communications &
Electronicsd
-13%
-7%
Sources: CRS analysis based on data in Figures 4-1 through 4-3 in Department of Defense, Estimated Impacts of
Sequestration-Level Funding: U.S. Department of Defense Fiscal Year 2015 Budget Request, April 2014;
http://www.defense.gov/pubs/2014_Estimated_Impacts_of_Sequestration-Level_Funding_April.pdf.
108110
Senate Armed Services Committee, Transcript “The Impacts of Sequestration on National Defense,” January 28,
2015.
109111
DOD Estimated Impacts, p. 4-2, April 2014.
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Notes: DOD assumes no cuts to its FY2015 request.
a.
Systems development is RDT&E related to specific weapon systems.
b.
Science & Technology is basic research not associated with a specific weapon system.
c.
“Combat systems” includes procurement of aircraft, warships, tracked vehicles and special operations
forces equipment; includes some minor procurement.
d.
These categories are part of "minor procurement," and sustain weapon systems.
e.
These categories are part of "minor procurement," and support weapon systems.
DOD Individual Weapon System Cuts under BCA Limits
For individual weapon systems, DOD’s cuts range widely in terms of quantity and percentage
cuts. Some programs, including the Army’s Apache helicopter remanufacture, the Marine Corps’
CH-53K helicopter, the Navy’s DDG-51, and the Air Force’s MQ-9 armed drone are cut by 25%
or more.
Other programs, like the Marine Corps’ amphibious combat vehicle, the Navy’s TAO oiler, and
the Air Force’s combat rescue helicopter, would be delayed. A few would be cancelled—one
brigade set of Stryker armored vehicles for the Army, the adaptive engine for the Air Force, and
an additional ground-based sensor for missile defense (Table 10).
Table 10. DOD's Cuts to Individual Weapon Systems under BCA Caps: FY2015FY2019
(in billions of dollars and % cut)
SERVICE
FY15-FY19 BCA Plan: Quantity and % Cut
FY15-FY19 BCA Plan: Billions of $ and % Cut
Total Qty
Quantity Cut
% Cut
Total $
$ Cut in Billions
% Cut
Blackhawk helicopter
410
-61
-15%
$7.2
-$1.2
-17%
Apache remanufacture
259
-67
-26%
$5.6
-$1.2
-22%
$1.3
-$0.8
-60%
ARMY
Stryker armored vehicles
Light utility helicopter
Not provided
One brigade set
Not provided
1,005
-45
-4%
$0.8
-$0.4
-48%
13
-7
-54%
$4.4
-$1.0
-23%
MARINE CORPS
CH-53K helicopter
Amphibious combat vehicle
Beginning
development
Beginning
development
Limited to
scoping
$1.1
-$0.5
-48%
V-22
Underfunded
No quantity cut
Underfunded
$5.3
-$0.3
-6%
H-1 helicopter
133
-11
-8%
$4.6
-$0.3
-7%
[44]
[-8]
[-18%]
[$69.1]
[-$8.2]
[-12%]
DDG-51
10
-3
-30%
$16.0
-$3.2
-20%
VA class submarine
10
-1
-10%
$27.9
-$1.2
-4%
NAVY/MARINE CORPS
All Ships Including
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SERVICE
FY15-FY19 BCA Plan: Quantity and % Cut
Total Qty
Carrier replacement program
(CVN)
P-8A aircraft
0
56
TAO fleet oiler
0
FY15-FY19 BCA Plan: Billions of $ and % Cut
Quantity Cut
% Cut
Total $
Delays delivery
of CVN 79; $2B
in cost after
FY2019
0%
$11.2
-$1.0
-9%
-11%
$12.2
-$1.0
-8%
0%
$1.9
-$1.8
-97%
-7%
$14.8
-$1.1
-8%
0
$1.1
-$1.0
-88%
-6
Delays
construction to
FY2016
$ Cut in Billions
% Cut
AIR FORCE
KC-45 tanker
69
Combat rescue helicopter
0
-5
Delay start
MQ-9 armed drone
83
-36
-43%
$2.1
-$0.9
-44%
MC-130J aircraft
35
-10
-29%
$3.8
-$1.2
-31%
Global Positioning System III
11
-1
-9%
$3.9
-$0.4
-10%
0
Cancelled
100%
$1.5
-$1.3
-91%
3,038
-531
-17%
$3.0
-$1.0
-34%
F-35A (AF) fighter aircraft
238
-15
-6%
$27.9
-$1.5
-5%
F-35B (MC) fighter aircraft
69
0
0%
$11.0
$0.0
0%
F-35C (N) fighter aircraft
36
-2
-6%
$6.4
-$0.2
-4%
$4.4
-$0.6
-13%
Adaptive engine
Adv. med. range air-to-air missile
(AIM120D)
JOINT PROGRAMS
Jt. Light tactical veh. (MC and
Army)
Jt. Direct attack munition (JDAM)
Slows Humvee
replacement
-1,000
Not provided
41,358
-17,095
-41%
$1.2
-$0.3
-27%
Interceptor follow-on
0
Cancelled
-100%
$4.4
-$0.6
-15%
Add'l ground-based sensor
0
Cancelled
-100%
$2.1
-$0.6
-27%
MISSILE DEFENSE
TOTAL Weapon System Cuts
Not applicable
Not applicable
Not applicable
$187.0
-$24.8
-13%
Total Modernization Decreases
Not applicable
Not applicable
Not applicable
$886.7
-$66.2
-7%
Sources: CRS analysis based on data in Figures 5-1 through 5-31 in Department of Defense, Estimated Impacts of
Sequestration-Level Funding: U.S. Department of Defense Fiscal Year 2015 Budget Request, April 2014;
http://www.defense.gov/pubs/2014_Estimated_Impacts_of_Sequestration-Level_Funding_April.pdf.
Notes: DOD assumes no cuts to its FY2015 request.
DOD’s report describes the individual cuts and potential impacts but does not explain why some
programs are cut more heavily than others, why particular programs are selected, or whether
some programs are experiencing technical or scheduling difficulties.
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Operations and Maintenance: Readiness vs. Other Support
Of the $1.1 trillion Operations and Maintenance (O&M) spending for FY2015-FY2020, DOD
categorizes
•
22% for service readiness activities, including unit training and depot
maintenance;
•
5% for upgrades of facilities on bases;
•
10% for the running of installations; and
•
62% for “Other Defense O&M,” including training and recruiting, schoolhouse
training, pre-positioning of war stocks, communications, transportation,
environmental restoration, and administration (Table 11).
In testimony on the FY2016 budget request, each of the Service Chiefs emphasized their concerns
about how BCA caps would affect readiness. Army Chief of Staff, Raymond Odierno said that
“sustainable readiness will remain out of reach with our individual and unit readiness rapidly
deteriorating between 2016 and 2020.110112
Navy Chief of Naval Operations, Admiral Jonathan Greenert said that a return to BCA limits in
FY2016 would “further reduce readiness of contingency response forces—the ones that are only
at one-third level.”111113 Air Force Chief of Staff General Mark A. Welsh III stated that recent
recoveries in the readiness of units to 50% would be reversed and “squadrons would be grounded,
readiness rates would plummet, red and green flag training exercises would have to be
canceled.”112114
Despite these concerns, DOD’s proposed plan to comply with BCA limits would cut service
readiness activities more than other O&M activities. While overall O&M would be cut by $40.1
billion or 4%, service readiness activities would be cut by 7%, shouldering 40% of the cut, almost
double their 22% share of total O&M (Table 11).
Service readiness activities include unit training and depot maintenance of weapon systems. After
the past 13 years of war when the services focused training on units scheduled to deploy and
emphasized training for small-scale operations for counterinsurgency operations, the services are
very gradually increasing “full-spectrum” training that would prepare units for larger conflicts.
Sequester cuts, they argue, would delay plans to transition to this training in several years.
While cuts to depot maintenance, another high-profile part of O&M, could be delayed when
equipment is refurbished and returned to units, this would be unlikely to affect the ability of units
to train because the size of the equipment inventory takes the time for repair into account. In
addition, the inventory is likely to be sufficient in light of the buildup of equipment for the wars
and recent decreases in military personnel levels.
Often tapped in tight times, facilities, sustainment, restoration, and modernization funds that are
used to upgrade base facilities would be cut by 14% cuts, more than three times its share of total
110112
Ibid, p.5-p.pp. 5-6.
Ibid, p. 8.
1148.
112
Ibid, p. 10.
111113
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O&M. Base installations support (e.g., paying electricity and water bills on bases), on the other
hand, often considered to be “fixed costs,” would be cut by 4%.
Table 11. DOD's Plan for Achieving BCA Operation & Maintenance Savings, FY2015FY2019 by Category
(in billions of dollars and %)
Operation and Maintenance
% Cut
Total
Caps
Cuts
From
DOD
Plan
DOD Plan
Total
Category
Service readiness
Facilities, sustainment, restoration, and
modernization
Installation services
Nondefense and other defense
Billions of $: FY2015FY2019
O&Ma
TOTAL
Shares of
FY15FY19 Total
BCA Cuts
$239.9
-$16.0
-7%
22%
40%
$49.4
-$7.0
-14%
5%
17%
$111.6
-$4.8
-4%
10%
12%
$667.6
-$12.3
-2%
62%
31%
$1,068.5
-$40.1
-4%
100%
100%
Source: Figures 5-1 through 5-15 in Department of Defense, “Estimated Impacts of Sequestration-Level
Funding: U.S. Department of Defense Fiscal Year 2015 Budget Request,” April 2014 in
Notes: CRS analysis of DOD report above. DOD assumes no cuts to its FY2015 request.
a.
Includes training and recruiting, schoolhouse training, prepositioning of war stocks, communications,
transportation, environmental restoration, and administration.
The reason for the small 2% cut to “other” O&M activities, which makes up 60% of O&M, is
unclear. Composed of training and recruiting, schoolhouse training, pre-positioning of war stocks,
communications, transportation, environmental restoration, and administrative activities, taking
reductions would require evaluating these “back office” activities that are often targeted for
savings by outside groups (see Appendix D).
Uncertainties Facing DOD
At first glance, it may be difficult to understand why DOD’s concern about the BCA caps has
grown just when those limits are about to rise each year by enough to cover inflation. However, in
addition to BCA spending constraints, DOD is also aware of the uncertainties in its future budget
projections.
In addition to the persistent tendency for cost growth in weapon systems, military personnel
compensation has grown rapidly in the past decade. O&M costs and support activities also show
unexplained but long-term tendencies to grow faster than inflation. DOD is also worried about
congressional reluctance to accept its proposals for health care and other compensation reforms
because savings from these changes are already embedded in budget projections.
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CBO Projections of the Cost of DOD’s Plan
For many years, the Congressional Budget Office has projected the cost of DOD’s Future Years
Defense Program (FYDP), as well as for longer periods, in order to assess whether DOD has
budgeted sufficient funds to carry out its program. CBO uses DOD programmatic data about
weapon system acquisition, various pay and economic factors, and historical experience to project
future costs. It also excludes savings from changes proposed by DOD, such as health care reforms
that require Congressional approval. For the 2014 evaluation, CBO compares its own projection
with both DOD’s FYDP plan and BCA spending limits.113115
Under these assumptions and starting from DOD’s FY2015 request, CBO projects that the cost of
carrying out DOD’s plan for FY2015-FY2021 would exceed DOD estimates by $215 billion or
about 5.5%. Compared to BCA caps, CBO projects a larger savings gap of $332 billion or 8.5%,
well above the 5.1% gap from DOD planning figures. At the same time, CBO’s latest projection
is half as large as projected for the FY2014 President’s budget request.114116
CBO’s projections are higher than DOD for several reasons including
•
higher annual increases in military pay and civilian pay than incorporated in
DOD’s plans (ECI rather than 1%),
•
exclusion of savings from DOD’s cost-sharing proposals that Congress has
previously rejected,
•
greater growth in health costs,
•
more O&M growth after FY2019,
•
higher projected cost growth for acquisition programs—roughly double that
incorporated by DOD—based on historical experience, and
•
potential “bow waves” because DOD has not adjusted its plans in response to
budget constraints.115117
Rising Cost per Troop
In addition to CBO’s higher projections of the cost of DOD plans, DOD is aware of the risks
posed by long-term increases in per-troop costs. Since FY1980, the cost per troop—for all
expenses ranging from pay to procurement—has almost doubled in real terms from $200,000 per
troop in FY1980 to $390,000 per troop in FY2016 request (Figure 9). This growth reflects
•
increases in the early 1980s during the peacetime buildup during former
President Reagan’s tenure,
•
further growth in the 1990s as DOD had difficulty adjusting its overhead and
infrastructure costs to the one-third decrease in the number of military personnel
in response to the end of the Cold War in 1990,
113115
CBO, Long-Term Implications of the 2015 Future Years Defense Program, p. 1-p. 6, November 2014;
http://www.cbo.gov/sites/default/files/cbofiles/attachments/49483-FDYP.pdf.
114116
Ibid., p. 3.
115117
Ibid., p. 9, p. 28, Figure 1-1, p. 29, and Figure 3-2.
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•
continued increases in per-troop costs despite five rounds of base closures,
•
higher compensation benefits and costs for military personnel after FY2000
particularly for health care, and
•
sharp increases in procurement and RDT&E in the past decade (Figure 9 and
Figure 10).
Figure 9. Cost Per Troop, FY1980-FY2016 Request
(in thousands of FY2016 dollars excluding war costs)
Sources: Calculated by CRS using OMB, Table 5.1 and Table 10.1 in FY2016 Historical Tables; OMB, FY2016
Historical Tables; https://www.whitehouse.gov/omb/budget/Historicals; totals adjusted to exclude emergency and
Overseas contingency Operations as shown in Table 2-1 and Table 7-5 in Department of Defense, Office of the
Under Secretary of Defense (Comptroller), National Defense Budget Estimates for FY 2016, March 2015;
http://comptroller.defense.gov/Portals/45/Documents/defbudget/fy2016/FY16_Green_Book.pdf.
Notes: In this figure, the total for DOD’s base budget is divided by estimated average strength for active-duty
forces; this calculation treats costs for reservists as part of overall costs for active-duty because of their support
role. Budget Authority is deflated by the GDP price index for Defense in OMB, Table 10.1, FY2016 historical
Tables, converted by CRS from FY2009 to FY2016 dollars.
Since FY2000, the cost per troop has increased sharply for most of DOD’s major types of
expenses—military personnel, Operation & Maintenance, Procurement, RDT&E—with the
exception of Military Construction/Family Housing (Figure 10). This growth reflects some of the
same factors cited by CBO including:
•
annual increases for both military and civilian personnel above the rate of
inflation and above the Economic Cost Index for labor costs,
•
a richer benefits package for military personnel, particularly in military health
care with out-of-pocket costs for active-duty and retired military at one-fifth the
average for civilians (e.g., low co-pays and a free Medigap policy in Tricare for
Life),
•
largely unexplained increases in other O&M support costs, and
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•
large increases in the cost of major weapons systems due to ever more
sophisticated technology, lower quantity buys, less competition, and fewer
military personnel as support roles shift to contractors. 116118
Figure 10. Trends in Average Per Troop Cost by Type of Spending
(in thousands of FY2016 dollars, excluding war costs)
Sources: Calculated by CRS using OMB, Table 5.1 and Table 10.1 in FY2016 Historical Tables; OMB, FY2016
Historical Tables; https://www.whitehouse.gov/omb/budget/Historicals; totals adjusted to exclude emergency and
Overseas contingency Operations as shown in Table 2-1 and Table 7-5 in Department of Defense, Office of the
Under Secretary of Defense (Comptroller), National Defense Budget Estimates for FY 2016, March 2015;
http://comptroller.defense.gov/Portals/45/Documents/defbudget/fy2016/FY16_Green_Book.pdf.
Notes: In this figure, the total for DOD’s base budget is divided by estimated average strength for active-duty
forces; this calculation treats costs for reservists as part of overall costs for active-duty because of their support
role. Budget Authority is deflated by GDP price index as shown in “Defense deflator” shown in OMB, Table
10.1, FY2016 historical Tables, converted by CRS from FY2009 to FY2016 dollars.
Figure 10 shows a flattening of this long-term trend in recent years; this may reflect
congressional endorsement of DOD’s requests to restrain military and civilians pay raises,
reductions in procurement, and efficiency packages, all adopted in response to BCA caps.
Congress is currently considering whether to adopt recommendations by the Military
Compensation and Retirement Modernization Commission in its January 2015 report. The
Commissioncommission proposed major changes to DOD’s current retirement system and health care plan as
well as other quality-of-life programs.117
116119
118
CBO, “Growth in DOD’s Budget from 2000 to 2014,” November 2014; http://www.cbo.gov/sites/default/files/
cbofiles/attachments/49764-MilitarySpending.pdf.
117119
Military Compensation and Retirement Modernization Commission, Final Report, January 29, 2015;
http://www.mcrmc.gov/public/docs/report/MCRMC-FinalReport-29JAN15-HI.pdf. Military Compensation and
Retirement Modernization Commission, “Recommendations Overview;” http://www.mcrmc.gov/public/docs/report/
MCRMC-Recommendations-Overview-Public-Final.pdf.
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Other uncertainties include the effectiveness of DOD’s planned efficiencies and whether DOD is
willing to adjust its long-term weapons acquisition objectives to meet BCA caps, assuming those
stay intact.
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Appendix A. How BCA Defense Spending Limits
Are Set
The original BCA (P.L. 112-25) set limits that would reduce discretionary defense spending by
about $860 billion between FY2012 and FY2021 from CBO’s current services baseline
(reflecting steady-state spending with increases to offset inflation) in effect at that time.118120
Compared to the Administration’s FY2012 request, savings would be about $1.0 trillion,
somewhat larger because the request included some real growth in defense spending beyond
covering the effects of inflation.
These savings would be achieved in two steps. First, about half of the savings were reflected in
defense spending caps set in the law. The second $500 billion in defense savings was to be
determined by a plan to be proposed by a bipartisan Joint Committee on Deficit Reduction
(popularly known as the Super Committee) and voted on by Congress.
If that committee failed to develop a plan within its deadline—as turned out to be the case—the
BCA required that the initial defense caps in the law be revised and lowered by an additional
$53.9 billion annually. The act established separate revised spending caps for defense and
nondefense (known as a firewall or division between overall discretionary spending limits). This
means that Congress must meet separate defense and nondefense annual cap each year to avoid
sequestration. The American Taxpayer Relief Act (P.L. 112-240) lowered the amount to be taken
from the initial statutory caps to $42.5 billion in FY2012 and FY2013. In FY2013, the BCA
required that the sequester reduction be applied to the enacted level.
Initially, the BCA caps set limits for “security,” a broad definition including not only National
Defense activities but also International Affairs and the Department of Homeland Security and
“non-security” (other activities). Beginning in FY2013, BCA spending limits were redefined to
apply to National Defense (budget function 050), consisting primarily of the Department of
Defense, and “nondefense” (all other). The Bipartisan Budget Act (P.L. 113-67) amendments to
the BCA specifically listed the annual revised caps or spending limits for FY2014-FY2021 that
must be complied with to avoid a sequester (see Box A).119121
If Congress breaches or exceeds either revised cap, the President is required to levy a sequester
that consists of largely across-the-board cuts. In the case of defense spending, these pro rata cuts
apply at either the account level or the individual program level. CBO refers to these spending
caps as an “automatic enforcement mechanism” because current statute requires a sequester in
any year that Congress breaches or exceeds the Act’s caps.120
118122
120
CBO, The Budget and Economic Outlook: An Update, August 24, 2011; http://www.cbo.gov/ftpdocs/123xx/
doc12316/08-24-BudgetEconUpdate.pdf.
119121
§101 in P.L. 113-67. The original BCA specified the amount to be taken from initial caps.
120122
CBO, “Estimated Impact of Automatic Budget Enforcement Procedures Specified in the Budget Control Act,”
September 12, 2011; http://www.cbo.gov/ftpdocs/124xx/doc12414/09-12-BudgetControlAct.pdf.
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Box A. Excerpt from OMB FY2014 Sequestration Report on “revised caps”121123
Section 302 of the BCA provided for revisions to the caps if legislation proposed by the Joint Select Committee on
Deficit Reduction to reduce the deficit by more than $1.2 trillion was not enacted by January 15, 2012. Because such
legislation was not enacted by this date, the sectionSection 302 revisions to the caps were triggered and reflected in the
OMB Final Sequestration Report for FY 2012, issued on January 18, 2012.
As required by law, the security category was redefined to include only the discretionary programs in the defense
budget function (050) (the “defense” category), which mainly consists of the Department of Defense and significant
portions of agency budgets for the Department of Energy (including the National Nuclear Security Administration)
and the Federal Bureau of Investigation. The non-security category was redefined to consist of all discretionary
programs not in the security category—essentially all nondefense (non-050) budget functions (the “nondefense”
category). The defense and nondefense categories were put in place for 2013 through 2021, replacing the overall
discretionary category for those years. While the separate caps were adjusted to reflect the redefinitions, the total
amount of discretionary funding remained unchanged.
121123
OMB, Sequester Preview Report to the President and Congress for Fiscal Year 2014 and OMB Report to the
Congress on the Joint Committee Reductions for Fiscal Year 2014, April 10, 2013, Corrected version, May 20, 2013,
p. p.
3 and p. 5; http://www.whitehouse.gov/sites/default/files/omb/assets/legislative_reports/
fy14_preview_and_joint_committee_reductions_reports_05202013.pdf. OMB sequestration reports only include the
reductions required for the second set of savings for the budget currently considered by Congress, arguing that
reductions in future years will be necessary unless Congress changes the law (see p. 5).
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Appendix B. Raising BCA Caps in FY2013-FY2015
Congress Modifies BCA Defense Spending Limits
Both the American Taxpayer Relief Act (ATRA, P.L. 112-240) and Bipartisan Budget Act (BBA,
P.L. 113-67) eased the path of meeting defense spending limits in the near-term. Together, these
acts provided defense with an additional $54 billion for FY2012-FY2015, reducing ten-year
savings required from the FY2012 President’s Budget plan by 1%. Instead of a ten-year defense
total of $5.40 trillion in the original BCA, the BBA sets a limit of $5.45 trillion.122124
In FY2012, Congress reduced DOD’s request by 4.2% or $23 billion to meet the new BCA
spending limits. The effect on DOD was softened because BCA spending reductions for FY2012
were applied to a broadly defined “security” category which included not only DOD but also the
Department of Homeland Security, International Affairs, the Department of Veterans Affairs, and
other small agencies.123125
American Taxpayer Relief Act
Several months after the FY2013 President’s budget plan was submitted, Congress modified the
BCA spending limits. Facing the “fiscal cliff”—the combined contractionary effects of ending the
tax cuts enacted during then-President Bush’s tenure, and slated BCA spending reductions in
FY2013—Congress passed P.L. 112-240/H.R. 8, the American Taxpayer Relief Act (ATRA) on
January 2, 2013, 17 months after enactment of the original BCA (P.L. 112-75).124126 Although ATRA
did not change the requirement for a sequester in FY2013, it reduced the amount of that sequester
from $54 billion for defense to $42.5 billion.
At the same time, ATRA softened the scheduled $62 billion cut between FY2012 and FY2013,
splitting the reduction over two years rather than one. Instead, ATRA mandated decreases of $36
billion in FY2013 and $20 billion the following year. Congress left later years intact (Table B-1).
To “pay for” or offset the reduction in savings, ATRA changed the treatment of Roth IRA
retirement accounts.125127
Under the adjusted ATRA caps, Congress cut defense spending from $555 billion enacted in
FY2012 to $518 billion in FY2013 rather than the $492 billion originally required. 126128 In the case
122124
See Table 1 above and for latest revised lowered caps, see Table 2 in OMB, Sequestration Preview Report to the
President and Congress for Fiscal Year 2016, February 2, 2015; http://www.whitehouse.gov/sites/default/files/omb/
assets/legislative_reports/sequestration/2016_sequestration_preview_report_president.pdf.
123125
See Table 3 and p. 9 in OMB, Final Sequestration Report to the President and Congress for Fiscal Year 2012,
January 18, 2012, 1-18-12; http://www.whitehouse.gov/sites/default/files/omb/assets/legislative_reports/sequestration/
sequestration_final_jan2012.pdf. International Affairs took more than its share of the BCA cut; see Stimson Center,
“The Coming Cut: Continuing Resolution,” by Russell Rumbaugh; Budgeting for Foreign Affairs and Defense, Budget
Analysis Brief, October 25, 2013; http://www.stimson.org/images/uploads/bfadb003_the_coming_cut.pdf.
124126
CRS Report R42700, The “Fiscal Cliff”: Macroeconomic Consequences of Tax Increases and Spending Cuts, by
Jane G. Gravelle.
125127
CRS Report R42884, The “Fiscal Cliff” and the American Taxpayer Relief Act of 2012, coordinated by Mindy R.
Levit.
126128
CRS Report R42949, The American Taxpayer Relief Act of 2012: Modifications to the Budget Enforcement
Procedures in the Budget Control Act, by Bill Heniff Jr.
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of DOD (which constitutes about 95% of the National Defense total), Congress appropriated
$527.4 billion, $2 billion above the request. After various adjustments, OMB’s sequester order
reduced the appropriated amount to $495 billion (see Table B-1).127129
The Bipartisan Budget Act
In the fall of 2013, faced with an impasse between the House and Senate about discretionary
spending levels that led to a temporary government shutdown, Congressman Paul Ryan and
Senator Pat Murray, Chairs of their respective budget committees, negotiated the Bipartisan
Budget Act of 2014 (BBA; H.J.Res. 59/P.L. 113-67). This made further adjustments in BCA
revised caps for FY2014 and FY2015 (Table B-1).
Table B-1. Adjustments in BCA Spending Caps
(in billions of dollars of budget authority)
Caps
Actuals
Defense Spending Caps
Budget Control Act of 2011 (BCA): S. 365/P.L. 112-75
Fiscal Year
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
Total:
12-21
National Defense (050)
552
552
555
492a
502a
512
523
536
549
562
576
590
5,397a
DOD (051) (estimated)
528
528
530
470a
480a
489
500
512
525
537
551
564
5,158a
The American Taxpayer Relief Act of 2012 (ATRA): H.R. 8/P.L. 112-240
National Defense: 050
552
552
555
518a
498a
512
523
536
549
562
576
590
5,420a
DOD: 051 (est.)
528
528
530
495a
476a
489
500
512
525
537
551
564
5,180a
Change from BCA: 050
—
—
0
26
-4
0
0
0
0
0
0
0
22
Change from BCA: 051
—
—
0
25
-4
0
0
0
0
0
0
0
21
Bipartisan Budget Act of 2013 (BBA): H.J.Res. 569/P.L. 113-67
National Defense (050)
552
552
555
518
520a
521a
523
536
549
562
576
590
5,451a
DOD (051) (est.)
528
528
530
495
497a
498a
500
512
525
537
551
564
5,210a
Change from ATRA: 050
—
—
0
0
22
9
0
0
0
0
0
0
31
Change from ATRA: 051
—
—
0
0
21
9
0
0
0
0
0
0
30
Total Cap Change from Original BCA to BBA
National Defense (050)
—
—
0
26
18
9
0
0
0
0
0
0
54
DOD (051) (est.)
—
—
0
25
18
9
0
0
0
0
0
0
51
Sources: CRS calculations based on P.L. 112-25, P.L. 112-240, P.L. 113-67, and OMB Table 32-1, 31-1, and 28-1
in OMB's annual Analytical Perspectives; also OMB, Final Sequestration Report. FY2014 and FY2015; OMB, “Final
Sequestration Report to the President and Congress for Fiscal Year 2014,” February 7, 2014;
http://www.whitehouse.gov/sites/default/files/omb/assets/legislative_reports/sequestration/
sequestration_final_feb2014.pdf; OMB, “Final Sequestration Report to the President and Congress for Fiscal
127129
Table provided to CRS by DOD.
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Year 2015,” January 15, 2015; https://www.whitehouse.gov/sites/default/files/omb/assets/legislative_reports/
sequestration/sequestration_final_january_2015_president.pdf.
Notes: Sections highlighted show years adjusted.
a.
Shows years adjusted. CRS used 95.4 % for DOD’s share of the revised caps based on the DOD (051)
share share
of National Defense (050) in FY2013 for all years.
Signed by the President on December 26, 2013, the BBA raised the ATRA cap for FY2014 from
$498 billion to $520 billion, a $22 billion increase. For the following year, the BBA raised the
earlier ATRA limit from $512 billion to $521 billion, a $9 billion increase. BCA caps remained
the same for FY2016 through FY2021.
With these changes, National Defense spending was set at the FY2013 post-sequester level $521
billion in FY2014 and FY2015, with a small increase to $523 billion in FY2016. This held
defense spending to a nominal freeze for essentially four years without increases to cover the low
levels of inflation in those years. After FY2016, defense spending under the caps would grow by
about $11 billion each year, providing slightly more than needed to offset projected inflation. By
FY2021, National Defense spending would be $590.0 billion, providing 2% real growth above
the FY2016 level (Table B-1)
In F2014, the Administration requested $552 billion for National Defense and $527 billion for the
Department of Defense (DOD). Congress appropriated $520 billion for National Defense and
$496 billion for DOD, complying with the BCA caps and avoiding a sequester (Table B-1).
For FY2015, the Administration requested $549 billion for National Defense and $522 billion for
DOD including $26.4 billion in a separate Opportunity, Growth and Security Initiative (OGSI)
that was intended to “accelerate modernization of key weapons systems, make faster progress
toward restoring readiness lost under sequestration [in FY2013] and improve its facilities.”128130
Congress appropriated $521 billion for National Defense and $496 billion for DOD, complying
with BCA revised caps and continuing a three-year nominal freeze in DOD spending that began
with the FY2013 sequester.
128130
The Administration requested $27.7 billion for National Defense (including $$26 billion for DOD), and an equal
amount for nondefense programs. OMB, Fiscal Year 2015 Budget of the U.S. Government, March 4, 2014; Department
of Defense chapter; http://www.gpo.gov/fdsys/pkg/BUDGET-2015-BUD/pdf/BUDGET-2015-BUD-6.pdf.
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Appendix C. Defense Plans Partly Adapt to BCA
Spending Limits
Some observers would suggest that changes to defense spending to comply with BCA limits
should be compared to the Administration’s original plan for defense spending before BCA
enactment. Others would argue that BCA limits should be compared to the FY2011 CBO steadystate baseline which extrapolates defense spending at the enacted level with increases only for
inflation, often referred to as a “real freeze.” Another approach compares BCA limits to
successive Administration plans from FY2013-FY2016 to see how plans were adjusted in
reaction to the caps.
Compared to CBO’s steady-state baseline, a “current services” baseline commonly used by
Congress and across the government, BCA caps to the CBO baseline at the time, BCA caps
required a reduction of $860 billion or about 14%. Before passage of the BCA, the gap between
the FY2012 Administration plan for National Defense (budget function 050) and the BCA
spending limits was close to $1.0 trillion for the decade (050). Defense spending was projected to
total $6.41 trillion for FY2012-FY2021, assuming 4% real growth over the decade.129131 Under BCA
limits, defense spending would total $5.4 trillion, or $1.0 trillion lower (Table C-1).
Table C-1. CBO Baseline, Administration Defense Plans and BCA Defense Limits
(in billions of dollars and % difference )
Fiscal Year/ Baseline
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2012-21
FY2012 CBO Steady
State Baselinea
554
552
562
574
586
599
614
630
646
664
682
700
6,257
na
na
555
492
502
512
523
536
549
562
576
590
5,397
Savings gap
na
na
-7
-82
-84
-87
-91
-94
-97
-102
-106
-110
-860
In percent
na
na
-1.3%
-14.3%
-14.3%
-14.5%
-14.8%
-14.9%
-15.0%
-15.3%
-15.5%
-15.7%
-13.7%
554
552
578
596
612
625
638
649
661
673
685
698
6,414
na
na
555
492
502
512
523
536
549
562
576
590
5,397
Savings gap
na
na
-24
-104
-110
-112
-115
-113
-112
-111
-109
-108
-1,017
In percent
na
na
-4.1%
-17.4%
-18.0%
-18.0%
-18.0%
-17.4%
-16.9%
-16.5%
-15.9%
-15.4%
-15.9%
Original BCA limits
FY2012 Pres. Budgetb
Original BCA limits
Sources: OMB, Fiscal Year 2012 Analytical Perspectives, Table 32-1; http://www.whitehouse.gov/sites/default/files/
omb/budget/fy2012/assets/32_1.pdf.; and CBO, The Budget and Economic Outlook: An Update, August 24, 2011;
http://www.cbo.gov/ftpdocs/123xx/doc12316/08-24-BudgetEconUpdate.pdf.
Notes:
a.
CBO’s baseline reflects the latest enacted level with adjustments for inflation in later years.
b.
The Administration FY2012 plan projected 4% real growth over the decade.
129131
The FY2012 Administration plan exceeded the CBO baseline by $157 billion; that baseline projects defense
spending at the latest enacted level with adjustments only for inflation.
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DOD’s Reaction to BCA Caps Changes over Time
BCA caps on defense spending primarily affect the Department of Defense (DOD). Since
enactment of the BCA, DOD budgets have been lowered in several steps, and DOD’s
characterization of the effects of BCA spending limits has shifted with each new budget.
FY2013 Plan Achieves Half of BCA Savings
DOD’s FY2013 budget plan included a reduction of $487 billion reduction in the FY2013 budget
plan compared to the prior year, achieving half of the savings needed to comply with BCA caps
measured against DOD’s pre-BCA plan. In “Defense Budget Priorities and Choices,” a January
2012 strategy report, DOD suggested that
Achieving these savings [of $487 billion for DOD] is hard, but manageable. It is hard
because we have to accept many changes and reductions in areas that previously were
sacrosanct. Collectively, the changes align our investments to strategic priorities and
budgetary goals, but individually, each one requires a difficult adjustment. It is manageable
because the resulting joint force, while smaller and leaner, will remain agile, flexible, ready,
innovative, and technologically advanced.130132
The strategy paper stated that DOD could continue to plan and
size forces to be able to defeat a major adversary in one theater while denying aggression
elsewhere or imposing unacceptable costs; [but] No longer size active forces to conduct large
and protracted stability operations, and structure major adjustments in a way that best allows
131133
for . . . regeneration of capabilities.
FY2014 Plan Adds Savings
With the additional $93 billion savings incorporated in the FY2014 DOD plan, the savings gap
between the plan and BCA amended caps for the next eight years shrank to $331 billion. In its
FY2014 report, “Defense Budget: Priorities and Choices,” DOD’s tone shifted from the year
before when the reductions were “manageable,” now warning that
The DoD is experiencing declining budgets that have already led to significant ongoing and
planned reductions in military modernization, force structure, personnel costs, and overhead
expenditures . . . [concluding overall that the] choices made in the FY 2014 submission
reflects the Department’s intent to deepen the budget and program alignment with the
President’s strategic guidance, seek additional taxpayer savings where possible and prudent,
and do so at minimum risk to the readiness or quality of the All-Volunteer Force. 132
130134
132
Department of Defense, “Defense Budget Priorities and Choices,” p. 1, January 2012; http://www.defense.gov/
news/Defense_Budget_Priorities.pdf.
131133
Ibid., passim.
132134
DOD, Defense Budget Priorities and Choices, Fiscal Year 2014, p. 1, and p. 10, April 2013;
http://www.defense.gov/pubs/DefenseBudgetPrioritiesChoicesFiscalYear2014.pdf.
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FY2015 Plan Trims Spending
The FY2015 DOD plan trimmed another $186 billion reducing the savings gap to about $175
billion.133135 In its FY2015 Budget Overview, DOD concluded that
The FY 2015 funding levels will allow the military to protect and advance U.S. interests and
execute the updated defense strategy – but with somewhat increased levels of risk for some
missions . . . [due to] gaps in training and maintenance over the near term and will have a
reduced margin of error in dealing with risks of uncertainty in a dynamic and shifting
134136
security environment over the long term.
DOD argued that it could comply with the amended BCA revised caps in the BBA for FY2015
but not in later years and meet the strategy in the 2014 Quadrennial Defense Review (QDR).
Then-Secretary of Defense Chuck Hagel warned that while
We can manage these anticipated risks under the president's budget plan, but they would
grow significantly if sequester-level cuts return in fiscal year 2016, if our reforms are not
accepted, or if uncertainty on budget levels continues. As I've made clear, the scale and
timeline of continued sequestration-level cuts would require greater reductions in the
military's size, reach, and margin of technological superiority. Under sequestration spending
levels, we would be gambling that our military will not be required to respond to multiple
major contingencies at the same time.135137
FY2016 Plan Rejects BCA Limits
In FY2016, BCA caps are slated to increase to $499 billion, $3 billion above the previous year,
and then to rise by about $11 billion annually from FY2017-FY2021, reaching $563 billion in
FY2021. DOD’s request of $534 billion exceeds the FY2016 cap by $36 billion. In its latest plan,
DOD made no attempt to incorporate additional savings.
In its FY2016 Budget Overview, DOD argues that recent geopolitical developments, including
the Islamic State offensive, the Ebola virus outbreak, and Russian actions in the Ukraine
have only reinforced the need to resource the Department of Defense (DoD) at the
President’s budget level rather than the current law. . . [and that the higher level] will allow
the military to protect and advance U.S. interests and execute the updated defense strategy but with somewhat increased levels of risk for some missions. . . [concluding that the] QDR
[Quadrennial Defense Review] strategy cannot be executed at sequester-levels of funding.136
133138
135
This figure includes the $26 billion requested for DOD in the Opportunity, Growth and Security Initiative fund.
Department of Defense, Fiscal Year 2015 Budget Request: Overview, Figure 1-1 and p.7-7, March 2014;
http://comptroller.defense.gov/Portals/45/Documents/defbudget/fy2015/fy2015_Budget_Request_Overview_Book.pdf.
135137
Department of Defense, Press Conference, “Remarks by Secretary Hagel and Gen. Dempsey on the fiscal year 2015
budget preview in the Pentagon Briefing Room, Presenters: Secretary of Defense Chuck Hagel and Joint Chiefs of Staff
Chairman Gen. Martin E. Dempsey, ”February 24, 2014;” http://www.defense.gov/Transcripts/Transcript.aspx?
TranscriptID=5377. This position is consistent with the 2014 Quadrennial Defense Review as discussed in
Department of Defense, Fiscal Year 2015 Budget Request: Overview, Figure 1-1, 2-1, 2-3, and p.7-7, March 2014 ;
http://comptroller.defense.gov/Portals/45/Documents/defbudget/fy2015/fy2015_Budget_Request_Overview_Book.pdf.
136138
DOD, Department of Defense Fiscal Year 2016 Request Overview, p.1-1, February 2015;
http://comptroller.defense.gov/Portals/45/Documents/defbudget/fy2016/
FY2016_Budget_Request_Overview_Book.pdf.
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For the Army, the chief concern is their conviction that its force structure would have to be cut
from 450,000 to 420,000 active-duty personnel, with associated cuts in reserve
forces.137According139According to Chief of Staff, General Raymond Odierno those force levels would mean
“jeopardizing the Army’s ability to execute even one prolonged multiphase contingency
operation. . . 138140
For the Navy, “Required cuts will force us to further delay critical warfighting capabilities, reduce
readiness of forces needed for contingency response, forego or stretch procurement of ships and
submarines and further downsize weapons capacity.”139141
General Joseph Dunford, commandant of the Marine Corps, testified that BCA funding levels
will result in a Marine Corps with fewer available active-duty battalions and squadrons than
we required for a single major contingency [and] result in fewer Marines and Sailors being
forward-deployed in a position to immediately respond to a crisis involving our diplomatic
posts, American citizens or US interest.140142
For Air Force Chief of Staff, Mark A. Welsh III, under ”sequestration level funding,” the Air
Force would face a choice between being “’ “ready and capable now’” and “ready and capable in
the future.” . . . [resulting in] an Air Force that, at sequestered levels of funding, cannot
successfully execute all Defense Strategic Guidance requirements.141
137143
139
Assistant Secretary of the Army (Financial Management and Comptroller), FY 2016 President’s Budget Highlights,
p. 33, February 2015; http://asafm.army.mil/Documents/OfficeDocuments/Budget/budgetmaterials/fy16//pbhl.pdf.
138140
Statement by General Raymond T. Odierno, Chief of Staff United States Army before the Senate Armed Services
Committee, “The Impacts of Sequestration on National Defense,” January 28, 2015; http://www.armedservices.senate.gov/imo/media/doc/Odierno_01-28-15.pdf.
139141
Senate Armed Services Committee, Statement of Admiral Jonathan Greenert,” Chief of Naval Operations, “The
Impacts of Sequestration on National Defense,” January 28, 2015; http://www.armed-services.senate.gov/imo/media/
doc/Greenert_01-28-15.pdf.
140142
Senate Appropriations Subcommittee on Defense, Transcript, “Hearing on President Obama's Fiscal 2016 Budget
Request for U.S. Navy and Marine Corps, “ March 4, 2015.
141143
Senate Armed Services Committee, Statement of General Mark A. Welsh III, Chief of Staff U.S. Air Force, ”The
Impacts of Sequestration on National Defense,” January 28, 2015;” http://www.armed-services.senate.gov/imo/media/
doc/Welch_01-28-15.pdf.
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Appendix D. Selected Bibliography of Ways to
Reduce Defense Spending
Below is a selected bibliography of recent reports on and studies of ways to reduce defense
spending. The list includes primarily reports that address the problem of reaching a particular
level by using various types of savings. It does not include the many reports on reducing the costs
of individual weapon systems.
Table 12. Selected Bibliography of Reports and Studies on Reducing Defense
Spending
Organization
Author
Title
Publicatio
n Date
URL
American
Enterprise
Institute
Mackenzie Eaglen
Shrinking Bureaucracy,
Overhead, and
Infrastructure
March 2013
http://www.aei.org/wp-content/
uploads/2013/03/-shrinkingbureaucracy-overhead-andinfrastructure-why-this-defensedrawdown-must-be-different-forthe-pentagon_083503530347.pdf
Brookings
Institution
Roughead, Gary,
Adm. (USN Ret,
and Kori Schake
National Defense in a
Time of Change,
Policy Brief 2012
Discussion Paper
2013-01
February
2013
http://www.brookings.edu/~/
media/research/files/papers/2013/
02/
us%20national%20defense%20cha
nges/thp_rougheaddiscpaper.pdf
O'Hanlon, Michael
A Moderate Plan for
Additional Defense
Budget Cuts
February
2013
http://www.brookings.edu/~/
media/research/files/papers/2013/
1/defense-budget-cuts-ohanlon/
defense-budget-cuts-ohanlon.pdf
Williams, Cindy
Making Defense
Affordable
February
2013
http://www.brookings.edu/~/
media/research/files/papers/2013/
02/
make%20defense%20affordable/
thp_williams_brief.pdf
Williams, Cindy
Making Defense
Affordable: Discussion
Paper 2013-02
February
2013
http://www.brookings.edu/~/
media/research/files/papers/2013/
02/
make%20defense%20affordable/
thp_williamsdiscpaper.pdf
Roughead, Gary,
Adm. (USN Ret,
and Kori Schake
National Defense in a
Time of Change,
Discussion Paper
2013-01
February
2013
http://www.brookings.edu/~/
media/research/files/papers/2013/
02/
us%20national%20defense%20cha
nges/thp_roughead_brief.pdf
Barno, David W.,
Lt. Gen. ret. and
Nora Bensahel,
Matthew
Irvine,Travis Sharp
Hard Choices:
Responsible Defense
in an Age of Austerity
October
2011
http://www.cnas.org/files/
documents/publications/
CNAS_HardChoices_BarnoBens
ahelSharp_0.pdf
Danzig, Richard
Driving in the Dark:
Ten Propositions
about Prediction and
October
2011
http://www.cnas.org/files/
documents/publications/
Center for a
New
American
Security
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Organization
Author
Title
Publicatio
n Date
National Security
URL
CNAS_Prediction_Danzig.pdf
Barno, David W.,
Lt. Gen. ret. and
Nora Bensahel,
Matthew Irvine,
Travis Sharp
Sustainable Preeminence: Reforming
the U.S. Military at a
Time of Strategic
Choice
May 2012
http://www.cnas.org/files/
documents/publications/
CNAS_SustainablePreeminence_
BarnoBensahelIrvineSharp_1.pdf
Barno, David W.,
Lt. Gen. ret. and
Bensahel, Nora,
Stokes, Jacob,
Smith, Joel, Kidder,
Katherine
The Seven Deadly Sins
of Defense Spending
June 2013
http://www.cnas.org/files/
documents/publications/
CNAS_SevenDeadlySIns.pdf
Korb, Lawrence J.,
and Alex Rothman
Defense in an Age of
Austerity
Korb, Lawrence J.,
Alex Rothman, and
Max Hoffman
$100 Billion in
Politically Feasible
Defense Cuts for a
Budget Deal
Center for
Center for
Strategic and
International
Security
Leed, Maren and
Brittany Gregerson
Keeping the Faith:
Creating a Sustainable
Path for Military
Compensation
Center for
Strategic and
Budgetary
Assessments
Harrison, Todd
and Mark
Gunzinger
Center for
American
Progress
Center for
Strategic and
International
Security
January
2012
http://www.americanprogress.org
/wp-content/uploads/issues/2012/
01/pdf/defense_austerity.pdf
December
2012
http://www.americanprogress.org
/wp-content/uploads/2012/12/
KorbDefenseCuts.pdf
October
2011
http://csis.org/files/publication/
111118_Leed_KeepingFaith_We
bS.pdf
Strategic Choices:
Navigating Austerity
November
2012
http://csbaonline.org/publications/
2012/11/strategic-choicesnavigating-austerity/
Harrison, Todd
Strategic Choices
Exercise Out brief
May 2013
http://www.csbaonline.org/
publications/2013/05/strategicchoices-exercise-outbrief/
Harrison, Todd
Chaos and
Uncertainty: The
FY2014 Defense
Budget and Beyond
October
2013
http://csbaonline.org/publications/
2013/10/chaos-and-uncertaintythe-fy-14-defense-budget-andbeyond/
Natalya Anfilofyeva
Joint Think Tank
Event: Alternatives to
the QDR and FY15
Defense Budget
January
2014
http://csbaonline.org/2014/01/28/
joint-think-tank-eventalternatives-to-the-qdr-and-fy15defense-budget/
Harrison, Todd
Strategy and Force
Structure choices
February
2015
http://csbaonline.org/publications/
2015/02/joint-think-tankstrategic-choices-exercise/
Murdock, Clark A.
et.al
Planning for a Deep
Defense Drawdown,
Part I, A Proposed
Methodological
Approach
May 2012
http://csis.org/files/publication/
120522_DD_Interim_Report.pdf
Murdock, Clark,
Ryan Crotty, and
Building the Affordable
2021Military
June 2014
http://csis.org/files/publication/
140625_Murdock_Building2021M
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Organization
Author
Title
Publicatio
n Date
Angela Weaver
Congressional
Budget Office
URL
ilitary_Web.pdf
Various
Reducing the Deficit:
Spending and Revenue
Options
March 2011
http://www.cbo.gov/ftpdocs/
120xx/doc12085/03-10ReducingTheDeficit.pdf
Goldberg, Matthew
W.
Costs of Military Pay
and Benefits in the
Defense Budget
November
2012
http://www.cbo.gov/sites/default/
files/cbofiles/attachments/11-1412-MilitaryComp_0.pdf
Approaches for Scaling
Back the Defense
Department’s Budget
Plans
March 2013
http://www.cbo.gov/sites/default/
files/cbofiles/attachments/
43997_Defense_Budget.pdf
Arthur, David
Options for Reducing
Defense Budgets to
Meet Funding Limits
Under the Budget
Control Act
December
2013
http://www.cbo.gov/publication/
44950?utm_source=feedblitz&
utm_medium=FeedBlitzEmail&
utm_content=812526&
utm_campaign=0
Angres, Leigh
Choices for Deficit
Reduction: An Update
December
2013
http://www.cbo.gov/sites/default/
files/44967-DeficitReduction.pdf
Various
Health Related
Options for Reducing
the Deficit 2014-2023
December
2013
http://www.cbo.gov/sites/default/
files/44906-HealthOptions.pdf
Tighe, Carla
Approaches to
Reducing Spending on
Military Pay and
Benefits, Presentation
to the Western
Economic Association
June 2014
http://www.cbo.gov/sites/default/
files/cbofiles/attachments/45443WEA_Presentation.pdf
Various
Options for Reducing
the Deficit
November
2014
http://www.cbo.gov/sites/default/
files/cbofiles/attachments/49638BudgetOptions.pdf
Defense
Reform
Caucus
Various
An Open letter to
Secretary Carter,
Chairman McCain,
Ranking Member
Reed, Chairman
Thornberry, Ranking
Member Smith,
Chairman Cochran,
Ranking Member
Durbin,Chairman
Frelinghuysen, Ranking
Member Visclosky
April 2015
https://www.aei.org/wp-content/
uploads/2015/04/
Defense_letter_april29Politico.pd
f
Department
of Defense
Secretary of
Defense Leon
Panetta
Sustaining U.S. Global
Leadership: Priorities
for 21st Century
Defense
January
2012
http://www.defense.gov/news/
Defense_Strategic_Guidance.pdf
Not specified
Defense Budget
Priorities and Choices
April 2013
http://www.defense.gov/pubs/
DefenseBudgetPrioritiesChoicesF
iscalYear2014.pdf
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Organization
Author
Title
Publicatio
n Date
Secretary of
Defense Ashton
Carter
Twenty percent
headquarters
reduction
Federal News
Radio
Adams, Gordon
Gordon Adams
interviewed in Federal
News Radio on the
defense budget
March 2015
http://www.federalnewsradio.com
/146/3821674/Gordon-AdamsDistinguished-Fellow-StimsonCenter
Foreign
Affairs
Leffler, Melvyn
Defense on a Diet:
How Budget Crises
Have Improved U.S.
Strategy
November/
December
2013
https://www.foreignaffairs.com/
articles/americas/2013-10-04/
defense-diet
Williams, Cindy
Accepting Austerity:
The Right Way to Cut
Defense
November/
December
2013
http://www.cfr.org/united-states/
accepting-austerity/p31891
General
Accountabilit
y Office
GAO-13-470
Human Capital:
Additional Steps
Needed to Help
Determine the Right
Size and Composition
of DOD's Total
Workforce
May 2013
http://www.gao.gov/products/
GAO-13-470
Military
Compensatio
n and
Retirement
Modernizatio
n
Commission
Chair, Alphonso
Maldon, Jr.
Final Report
January
2015
http://www.mcrmc.gov/public/
docs/report/MCRMCFinalReport-29JAN15-HI.pdf
National
Commission
on Fiscal
Responsibility
and Reform
Commission staff
Draft Co-Chairs
Proposal
November
2010
http://www.fiscalcommission.gov/
sites/fiscalcommission.gov/files/
documents/CoChair_Draft.pdf
Commission staff
$200 Billion in
Illustrative Savings
November
2010
http://www.fiscalcommission.gov/
sites/fiscalcommission.gov/files/
documents/
Illustrative_List_11.10.2010.pdf
National
Defense
University
Kugler, Richard L.
and Linton Wells II
Strategic Shift:
Appraising Recent
Changes in U.S.
Defense Plans and
Priorities
April 2013
http://ctnsp.dodlive.mil/files/2013/
10/Strategic-Shift.pdf
Project on
Defense
Alternatives
PDA Briefing
Memo #56
A Reasonable
Alternative to
Sequester of DoD
Funding,
August
2012
Conetta, Carl
A Reasonable
Defense: A Sustainable
Approach to Securing
the Nation
Congressional Research Service
July 2013
URL
November
2012
http://news.usni.org/2013/08/02/
document-carter-memo-onheadquarters-reduction
http://www.comw.org/pda/
fulltext/140812bm56-DefenseSequester.pdf
http://www.comw.org/pda/
fulltext/121114-ReasonableDefense.pdf
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Defense Spending and the Budget Control Act Limits
Organization
Author
Title
Publicatio
n Date
URL
Project on
Defense
Alternatives
and Cato
Institute
Conetta, Carl,
Charles Knight,
and Ethan
Rosenkranz
Defense Sense:
Options for National
Defense savings, Fiscal
Year 2013
RAND
Johnson, Stuart E.,
Irv Blickstein,
David C. Gompert,
Charles Nemfakos,
Harry J. Thie,
Michael J.
McNerney, Duncan
Long, Brian
McInnis, Amy
Potter
A Strategy-Based
Framework for
Accommodating
Reductions in the
Defense Budget by
2021
Hosek, James, Beth
J. Asch, Michael G.
Mattock
Should the Increase in
Military Pay Be
Slowed?
June 2012
Johnson, Stuart E.,
Irv Blickstein
U.S. Defense
Department Needs to
Set Priorities, Weigh
Risks: Defense in an
Age of Austerity
Winter
2012
Defense Advisory
Committee,
Blechman, Barry et.
al.
A New USU.S. Defense
Strategy for a New
Era
November
2012
http://www.stimson.org/images/
uploads/research-pdfs/
A_New_US_Defense_Strategy_
for_a_New_Era.pdf
Leatherman,
Matthew, Barry
Blechman, and
Russell Rumbaugh
Managing the Military
More Efficiently:
Potential Savings
Separate from
Strategy
May 2013
http://www.stimson.org/images/
uploads/research-pdfs/
Managing_the_Military_More_Effi
ciently.pdf
Defense Advisory
Committee,
Blechman, Barry et.
al.
Strategic Agility:
Strong National
Defense for Today’s
Global and Fiscal
Realities
September
2013
http://www.stimson.org/images/
uploads/
Strategic_Agility_Report.pdf
Stimson
Center
May 2012
http://comw.org/pda/fulltext/
120515DefSense.pdf
2012
http://www.rand.org/content/
dam/rand/pubs/
occasional_papers/2012/
RAND_OP379.pdf
http://www.rand.org/content/
dam/rand/pubs/technical_reports/
2012/RAND_TR1185.pdf
http://www.rand.org/pubs/
periodicals/rand-review/issues/
2012/winter/us-defensedepartment-needs-to-setpriorities.html
Author Contact Information
Amy Belasco
Specialist in U.S. Defense Policy and Budget
abelasco@crs.loc.gov, 7-7627
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Acknowledgments
The following CRS colleagues in the Foreign Affairs, Defense, and Trade Division provided useful
comments on this report: Nathan Lucas, Valerie Grasso, Daniel Else, Jeremiah Gertler, and Marian Lawson
in a very timely fashion. The CRS Graphics staff, including Sandra Edwards, provided enormous help with
tables and figures.
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