Congress is sending Hagel a signal

The Senate appropriators have been struggling all week to complete a companion bill to the one passed in the House last week, providing money for this fiscal year for DOD and several other federal agencies.

The disagreements and more than 100 potential amendments (easier to offer in the Senate than in the House) have delayed consideration into next week, but it looks likely that there will be an FY 2013 appropriations bill for the Defense Department before they adjourn for Easter.

Meanwhile, both the House and Senate Budget Committees have reported out longer-term budgetary plans -- the budget resolutions -- that look at FY 2014 and beyond.

There is a fundamental reality about what the Congress is doing, one on which Secretary Hagel must focus. The signals are clear: The Senate and the House are not going to use the appropriations bills or the budget resolutions to bail out DOD from the sequester and a long-term drawdown in the defense budget. Time to wake up and smell the coffee.

Flexibility to deal with sequestration was one such signal. The House appropriations bill did not give DOD any greater flexibility than it now has to reprogram or transfer monies between accounts. It did increase operations funding, like the administration had requested, which raises the baseline from which sequestration would happen. And it provided some legislative relief from provisions in last year's defense budget, which would have hamstrung DOD unless they got a new bill covering this year.

Sen. Barbara Mikulski made a more direct attack to provide transfer flexibility. But it failed, and the reason for the failure is significant: Unless every agency got that flexibility, it was clear that it was not going to pass. Defense was not going to get special treatment.

Signal two is in the budget resolutions. As I noted earlier this week, Chairman Ryan's bill folded on the hope that DOD might get more funding in the long-term than the Budget Control Act caps passed in August 2011. He tried that last year and it went nowhere -- it wasn't even useful to Mitt Romney, who argued in his campaign that DOD should get four percent of the Gross Domestic Product.

This year, he abandoned that trench for the next one: holding the line at the BCA level for the next 10 years. That's probably the high-water mark, because Sen. Patty Murray's proposal takes another $240 billion out of the BCA funding levels over the next ten years.

The administration is going to send up its budget, one day. Maybe in early April. And it is going to be a mythical beast that ignores the signals. It will hope for the BCA levels, which is just plain unrealistic.

Secretary Hagel is supposed to send out guidance for the Department's next Quadrennial Defense Review next week. If realism is going to set in at DOD, that guidance had better make the QDR a resource-driven effort and start looking at decisions and options at budget levels below the BCA caps. That would send the internal signal the services need to hear.

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National Security

The Ryan Express strikes again

Well, the first round in the FY 2014 budget wars has begun. The Republicans, led by Paul Ryan, have made their latest offer in the non-stop non-negotiation on taxes and spending. And when it comes to defense, the Ryan Express is true to form: full of empty boxcars and misleading data.

The goal of the proposed resolution is, as it was last year, to "protect defense." Now, to be fair, his defense number -- $560 billion -- is about $15 billion below his number in last year's resolution. Slight dose of realism there.

But basically the Ryan Express defense boxcar is empty of any contribution to deficit reduction. It seeks to reverse the sequester on defense spending, something it does not do on the domestic side, by holding the defense budget flat (last year's budget plus inflation) for the next 10 years -- as if sequester never happened and never would, either.

Not enough, says the Heritage Foundation; more than we need or the Defense Department will ever see, say I. That level of funding would give DOD more than $6 trillion over the next decade. Heck, they will be lucky to see $5.2 trillion, in my view -- or something like a 20 percent cut in constant dollars below that flat line.

And there is a really misleading number in the middle of Ryan's discussion of the sequester's impact on the defense budget. Ryan says: "Though defense is about 20 percent of the budget, it's absorbing 50 percent of the cuts." This assertion takes the Express right off the rails.

Defense is only 20 percent of the budget if he includes entitlement spending. But entitlement spending is virtually immune from sequestration. The sequester hits discretionary spending -- the funds the appropriators provide each year to the federal agencies. Defense is more than 50 percent of discretionary spending, which doesn't make the sequester formula look so unfair, after all.

But, then, Ryan wants it to look unfair, hoping the Washington data mavens will miss the subtle change.

This Express is not going to move very far, very fast. It returns us to pre-sequestration days and is on a collision course with what Sen. Patty Murray is crafting in the Senate Budget Committee as we speak. Stay tuned for the sounds of the train wreck.

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