December 11, 2013

The Budget Deal: Good, But Not Great, News for DOD

Yesterday’s budget deal is good news for the Department of Defense (DOD).  Yet DOD will still feel the sharp pain of the sequester for the rest of Fiscal Year (FY) 2014 and for years to come, because the deal restores less than half of the cuts that DOD was facing this fiscal year. 

Current law caps defense spending at $498.1 billion in FY 2014 – the lowest level during the 10-year period covered by sequestration – and at $512 billion in FY 2015.  If the budget deal passes both houses of Congress, the FY 2014 defense budget would increase by $22.4 billion, to $520.5 billion, and the FY 2015 defense budget would increase by $9.4 billion, to $521.4 billion. These increases would help relieve the worst effects of sequestration, especially the drastic cuts to training and readiness that have occurred during the past few months. 

The military services have been forced to cut back in these two crucial areas because it is one of the only ways they can generate quick savings within a fiscal year.  Cutting procurement, end strength, force structure and even pay and benefits do save money, but the savings accrue over years, not months.  Cutting training and readiness saves money quickly, but may come at an even higher cost: the risk that U.S. military forces will expend greater amounts of blood and treasure if called upon to fight. 

If passed, the budget deal would enable the services to increase the funds available for training and readiness, which would be indisputably valuable.  Yet it would not relieve the services from having to make very hard budget choices.  Even with the additional $22 billion, DOD will still have to cut $32 billion from its original budget request of $552 billion, or approximately 5.7 percent.

DOD would certainly prefer a 5.7 percent budget cut to the almost 10 percent cut it would face without the budget deal, but those cuts will still be painful.  Since Congress has explicitly ruled out generating savings by reforming military benefits and closing unnecessary facilities, DOD will still have to reduce end strength (particularly in the Army), eliminate some force structure, curtail modernization programs, and even keep training and readiness below ideal levels in order to achieve the required savings.

The inhabitants of the E-Ring must have been relieved to know that the worst may not come to pass – but they also know that lots of hard work remains ahead.

(Photo credit: Yahoo News)

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