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Editor’s note: The next president is in for a rough welcome to the Oval Office given the list of immediate crises and slow-burning policy challenges, both foreign and domestic. What should Washington do? Why should the average American care? We’ve set out to clearly define US strategic interests and provide actionable policy solutions to help the new administration build a 2017 agenda that strengthens American leadership abroad while bolstering prosperity at home.
What to Do: Policy Recommendations for 2017 is an ongoing project from AEI. Click here for access to the complete series, which addresses a wide range of issues from rebuilding America’s military to higher education reform to helping people find work.
It is no secret that President Donald Trump’s first defense budget falls short of his own rhetoric. The president’s budget (PB) request for fiscal year (FY) 2018 totals $668 billion: a $603 billion base budget combined with $65 billion in Overseas Contingency Operations (OCO) funding. The topline is $33 billion greater than FY2017 appropriated spending (Table 1) and $18 billion above President Barack Obama’s planned FY18 base budget request (Table 2).1 This represents a 5.5 percent bump over last year’s defense funding and a more modest 3 percent increase over his predecessor’s expected base budget. No honest observer would call this a “historic” increase.
Worse, President Trump’s budget will not begin to rebuild America’s military. To confront rising threats in Eastern Europe, East Asia, and the Middle East, America needs to adopt a three-theater force-sizing construct. This requires robust and balanced investments in the military to replenish the shrinking inventories and aging technologies of a force that can no longer “shock and awe” its adversaries. In To Rebuild America’s Military, American Enterprise Institute scholars demonstrated that such a rebuild could be accomplished through sustained investments in the military of no less than 4 percent of gross domestic product (GDP).2 By contrast, Trump’s first budget request represents only 3.4 percent of next year’s projected GDP.
Many critics have called out Trump for his underwhelming defense budget. They rightly contend that rebuilding the military requires significantly more funding than the president has requested. In the armed forces, Pentagon leadership has acknowledged that the 2018 proposal represents a “repair” budget. They have promised that a genuine rebuild will begin in 2019, when they aim for a sustained period of 3–5 percent real annual growth.3 The individual services have now released their unfunded priorities lists, which confirm that each branch of the military would still face shortfalls even if the president’s budget request passed in full.
By and large, reactions to PB18 have focused on topline defense spending or line-item funding for the coming fiscal year. But the insufficient size of the requested increase for next year is not the only—or indeed the main—problem with Trump’s defense budget.
First, in his initial request to Congress, Trump chose to ready the military for the light-footprint wars of today, emphasizing training, readiness, and stockpiling munitions, and to invest many remaining resources in the speculative technologies of the distant future. Both of these investments will contribute to building a healthier force, but they come at a cost. Across the services, the procurement account foots the bills. If Trump maintains this investment approach throughout his tenure, the military will continue the steady decline that began with the post–Cold War drawdown. Reversing this decline demands not just more funding, but better investment balance across the short, medium, and long term.
Second, the president’s request raises questions about the depth of Trump’s commitment to growing the military and his ability to deliver the legislative changes needed to accomplish a genuine buildup. Thus far, many commentators have failed to consider how the president’s request relates to the rest of the federal budget or what it portends for coming defense-related legislative battles on Capitol Hill. Neither finding bodes well for defense funding in 2018 and for the duration of the president’s term.
Overall, Trump’s budget creates the troubling impression that the president is inclined toward a more muscular status quo regarding defense spending and policy. That would not represent enough of a change from his predecessor to build a military that can deter the wars the country does not want to fight and win the ones it must.
Comparing 2017’s Apples to 2018’s Oranges
Defense analysts generally study two relationships to glean the probable impact of budget requests: (1) the difference between the current request and last year’s enacted spending and (2) the difference between the current request and overlapping projections from the previous year’s request. The first comparison yields an estimate of how much the Pentagon can expect to grow internally from one year to the next. The second illustrates how the White House’s plans and priorities have changed from the previous year. Overall, the two metrics offer different insights and provide the most value when used in tandem.
During presidential transition years, analysts typically lean on the second metric, which provides salient comparisons between two administrations. However, the complexity of the FY17 appropriations process presents distinct methodological challenges for such an approach this year.
Defense appropriations for FY2017 effectively came through in three tranches. First, the Obama administration requested an amendment to OCO, which was appropriated as part of the December 2016 Continuing Resolution governing defense spending in the absence of FY17 appropriations.4 The May 2017 omnibus spending package appropriated the other two tranches, simultaneously responding to President Obama’s PB17 request and the Trump administration’s request for additional appropriations issued in March 2017.
In particular, the two sources of additional appropriations for FY17—the December OCO amendment and President Trump’s request for additional appropriations—frustrate comparisons of planned FY18 spending. First, as with all requests, projections for future spending derive from the request for the upcoming year and enacted funding from the previous fiscal year. Comparing FY18 requests undercuts Trump’s claim that his requested increase in defense spending would be “historic.” It looks worse when one considers that President Obama based his FY18 request on lower spending assumptions for FY17 than President Trump could have expected while formulating his budget.
Second, the additional appropriations raise issues pertaining to attribution. Should comparisons with President Obama incorporate his OCO amendment? How should President Trump’s request be compared with last year’s spending, parts of which he is responsible for?
Ultimately, this analysis uses both approaches, although it leans on historical comparisons. Trump did well to procure additional FY17 funding, but how he compares to his predecessor matters little to the military. The Pentagon needs to see robust, year-over-year growth to begin its rebuild.
By the Numbers: Trump’s Repair Budget
In accordance with guidance received from Secretary of Defense James Mattis earlier this year, the FY18 defense budget request prioritizes readiness.5 To accomplish this, the plan focuses on increasing end strength, restoring training and maintenance, replenishing depleted munitions inventories, and updating facilities.
If enacted, President Trump’s base budget would exceed President Obama’s planned FY18 defense budget by $18 billion. Trump allocates roughly half of these “new” dollars—the aggregate of growth in the Military Personnel (MILPERS) and Operations and Maintenance (O&M) accounts—to end-strength increases. The Trump administration has hailed this as a victory, claiming these extra dollars would add 56,000 new personnel across the services.6
President Trump arrived at the 56,000 figure by comparing his request to President Obama’s planned request for FY18. When President Obama issued that guidance in his FY17 budget request more than a year ago, he foresaw significant drawdowns in both the Army and the Marine Corps. Right before President Obama left office, however, Congress authorized end-strength levels that reversed this planned decline. That means Congress had already authorized the majority of the troop additions that Trump celebrates as his own. Consequentially, most of these additions do not represent true increases: Deciding not to shrink the force is not the same as actually growing it.
Comparing President Trump’s request with the end-strength levels that the 2017 NDAA authorized— insofar as it reflects the government’s most up-to-date personnel blueprint, a more accurate baseline by which to measure the new administration’s impact—shows that President Trump’s budget would add only 10,800 troops to the force (Table 3).7 That will plug gaps. It will also provide needed relief for a force that has been stretched thin by deployments for the past 16 years. But it will not remedy more fundamental problems stemming from today’s undersized military.
President Trump’s budget adds this end strength, but it fails to provide the resources necessary to create additional force structure. Adding people without adding associated units is only a half measure. New troops and more training will temporarily rejuvenate the force, but an overtaxed force structure—particularly aging and already overused capital assets—will continue to strain under a greater burden than it is meant to handle. A repair budget without the rebuild ensures this worrisome trend will continue.
Overall, the majority of the increase in this year’s request relative to President Obama’s plan will effectively plug holes in an overstressed personnel system. To ensure these investments pay dividends down the line, the services also need to modernize, supplying new forces with the ships, vehicles, equipment, and technology to deter conflict across the globe.
Research and Development Spending Ends Delays but Incorporates Gimmicks
At first glance, Trump’s budget appears to recognize the need for modernization through a major boost to the Research, Development, Training, and Evaluation (RDT&E) account (Figure 1). The Air Force in particular would receive a large amount of additional funds. Of the $7.6 billion Trump added to the RDT&E account compared to Obama’s proposal, roughly $3.7 billion goes to the Air Force.
Historically, the Air Force has received the largest RDT&E outlay among the services, typically two times more than equivalent funding for the Navy and three times that of the Army.8 Unfortunately, this year’s RDT&E spike will not redress exigent modernization shortfalls. Indeed, a significant portion of it has nothing to do with innovation or research.
In Trump’s request, civilian acquisition pay jumped nearly 35 percent in the Air Force’s RDT&E account for FY2018 when compared to the previous year’s enacted totals. This increase stems from an accounting shift; the Pentagon transferred the payroll for 10,000 acquisition personnel from the O&M account to the RDT&E account for transparency reasons.9 As a result, roughly 25 percent of the increase to the Air Force’s RDT&E account is specious.
For actual research line items, the Air Force’s B-21 Raider, part of the Pentagon’s Long Range Strike Bomber program, would receive a $164 million cut from spending that the Air Force anticipated for 2018. Conversely, Air Force space procurement would see a boost through additional funding allocated for GPS III next-generation satellites, satellite jammers, and space command-and-control systems.
Efforts to translate innovative research programs into battlefield capabilities also benefit from new funding. The Tech Transition Program, primarily focused on the Adaptive Engine Transition Program and hypersonic prototyping, received $343 million above planned spending for 2018, the single-largest line-item increase for any Air Force program in the service’s entire RDT&E request of $34.9 billion. Upgrades for the F-22A, F-15E, and B-1B collectively received $337 million in funding to extend their service lives. Regarding munitions, the nuclear- and conventional-capable Long Range Stand-Off air-launched cruise missile received an extra $31 million in funding compared to FY17 estimates of the program’s needs in FY18.
The Navy’s outlook mirrors the Air Force’s: Most of their increase in RDT&E spending is illusory, and the rest funds long-horizon innovations. Trump increased naval RDT&E by $1.46 billion, bringing the total request to $17.68 billion. Of that total, the majority—more than $14.5 billion—would fund advanced component development and prototypes, system development and demonstration, and operational systems development.
Most of this new funding would rescue programs that have fallen behind schedule. Aviation program delays account for $395 million in increased costs for developing the F-35 Joint-Strike Fighter, CH-53K King Stallion, MQ-4C Triton, and MQ-8C Fire Scout.10 Surface ship research runs up another $395 million just to keep the development of arresting gear for the Ford class carrier, a new frigate, the DDG-1000, Littoral Combat Ship modules, and the Zumwalt rail gun on track.11
The remaining request for the Navy focuses on innovation. Funding for classified naval programs increases by $200 million. Research into solid-state lasers also receives a bump, but the Navy would slow new rail gun programs, which have taken longer than expected to operationalize. Additionally, the Surface Navy Laser Weapons System would begin development in FY18.
Access to precision, navigation, and timing capabilities will benefit from $22 million in additional GPS research, while $89 million in additional outlays on next-generation jammers for the EA-18G Growler will seek to deny radar and communications capabilities to potential adversaries. On the munitions front, $71 million for the Tactical Tomahawk program, which would create an anti-ship capability, stands out as a notable addition. Further down the line, the Navy seeks funding dedicated to advanced undersea prototyping, hard- and soft-kill ship defense systems, and more unmanned carrier drones.
The Trump request also pluses up the RDT&E component of the Army’s budget, investing $1.55 billion more than what Obama planned and bringing the total Army RDT&E request to $9.54 billion. Although the Army RDT&E account received less than half of the funding allotted to the Department of the Navy’s RDT&E spending in FY17, the Army receives a larger absolute funding increase than the Navy in the FY18 request. This bump would provide $112 million to keep the second increment of the Indirect Fire Protection Capability cruise-missile defense system on track and $167 million to continue development of the Integrated Air and Missile Defense Battle Command System, despite a four-year delay in initial operational capability to FY22.
In addition to eliminating delays, new funds would improve current capabilities in the short term. For example, the service’s request allots an additional $128 million to three artillery modification and improvement programs. Trump’s budget includes vehicle improvements amounting to $94 million more than Obama’s suggestions, plus an additional $100 million in funding for the development of Active Protection Systems for Army vehicles.
Across all the services, the responsibility for imagining much of this paradigm-shifting technology falls to the Strategic Capabilities Office (SCO), funded by the defense-wide RDT&E account. In Trump’s request, this account would receive an additional $821 million, $630 million of which would go toward the SCO. Funding for the SCO and other defense-wide initiatives will undergird advances in alternate navigation, directed energy and high-speed strike weapons, new high-efficient turbine engines, and drone warfare. Lower-priority mid- and long-term innovation projects are diminished a bit to fund missile defense, with $127 million extra allotted to Ground-Based Interceptors, $160 million on new Pacific- and sea-based radars, and $144 million for Redesigned Kill Vehicles. Lastly, the request resources a $75 million new-start program for hypersonic missile defense mandated by the 2017 NDAA.
Procurement Spending Disappoints
A healthy military needs forward-leaning, speculative investments to maintain its edge in future battles, but these should not come at the expense of capital investments in equipment that prepares the force for missions in the course of the next decade. Regrettably, Trump’s budget does just that.
The armed forces will not be able to use their advanced capabilities to ensure dominance in the future if they can be defeated due to a lack of comprehensive modernization now. A three-legged stool cannot retain balance if one of its legs collapses.
As Table 1 illustrates, the Trump budget would actually spend $0.3 billion less in base budget funding for acquiring new equipment relative to Obama’s plans. Note that the procurement account includes munitions purchases, meaning a portion of this funding essentially supports readiness, not modernization. Indeed, Secretary Mattis is reported to have personally intervened to allocate $2 billion to increase the rate of munitions production for six crucial munitions, which has consequences for procuring major weapons systems for each of the services.12 Nevertheless, several high-profile procurement projects would get underway in Trump’s FY18 plan.
The Air Force fares relatively well, receiving two more F-35 aircraft than expected and increasing annual procurement to 46 aircraft. However, the Air Force later asked Congress for an additional 14 aircraft to bring the total to 60 in order to increase their production line’s efficiency and reduce the unit cost of each aircraft.
The majority of Air Force procurement increases reside in the “other” category—a catchall containing base improvements, command-and-control functionality, and anything that falls outside of aircraft, space systems, munitions, or missiles (Tables 4 and 5).
President Trump’s original budget did not increase shipbuilding over Obama’s plan at all, despite Trump’s promise to build toward a 355-ship Navy (Tables 6 and 7).13 Only after releasing the budget did the administration agree to increase shipbuilding by purchasing an additional Littoral Combat Ship (LCS).14 This brings 2018 LCS production to two vessels, still below the threshold that defense contractors say would sustain existing industrial capacity for the LCS. Trump’s shipbuilding plan does not otherwise deviate from Obama’s planned purchase levels, which sought to build a 308-ship Navy, until 2021, when a second Virginia-class attack submarine would be added.15 On top of the reductions to shipbuilding, Trump’s budget decreases naval aircraft procurement by $632 million compared to Obama’s plan for FY18.
Under Trump’s request, Marine Corps procurement benefits from a humble increase of $66 million. The first purchases of Amphibious Combat Vehicles, a new program amounting to $161.5 million, represents the principal initiative.
Finally, Army procurement is a mixed bag (Tables 8 and 9). Where Obama’s budget planned to remanufacture 58 AH-64 Apache helicopters to the new Block IIIA standards, Trump’s base budget resources only 48 such conversions, with two more funded by OCO. To fill that gap, though, Trump’s request includes an additional 13 new-build AH-64 Apaches over Obama’s plan.
Additionally, a five-year block buy for CH-47 Chinook transport helicopters expires in FY17. As a result, President Obama planned to scale back purchases from 22 to 13. Trump’s plan would cut output to six, and production would not return to 13 helicopters annually until FY21. In a demonstration of the increased inefficiencies of lowered production rates, the cost of each Chinook is estimated to rise by $5.4 million.16
The standout account is Weapons and Tracked Combat Vehicles (WTCV), which grows by nearly a billion dollars principally resourced through additional OCO funding directed into the European Reassurance Initiative. Most of the noteworthy changes in procurement programs reflect this focus on Europe. For example, $475 million that the Army anticipated spending to refit 70 Stryker Infantry Combat Vehicles was cut completely and used to fund improvements to Bradley and Abrams upgrade programs that increase their survivability in high-tempo operations. Additionally, the new M113 armored personnel carrier replacement—the Armored Multi-Purpose Vehicle—received the green light to begin procurement with a $447.6 million buy under the Trump plan.
Missile procurement grows from $2.7 billion appropriated in FY17 to $3.1 billion requested in FY18, with base funding increased by $1 billion. This funding supports both missile defense and a $334.5 million bump for Guided Multiple Launch Rocket System missiles, which have proved effective in the fight against ISIS and fulfill a useful deterrent role in Europe.
The Barbell Budget
Overall, President Trump’s defense budget continues a favored Washington tradition of investing in the immediate and long term while shortchanging the messy middle. This “barbell” investment strategy emphasizes the conflicts of today and those of the distant future, while discounting the long bar of the medium term, wherein most strategic and military risk lies (Figure 2).
Most of the US military’s acquisition needs involve investments in the next three to 15 years, including constructing fleets of ships; buying new inventories of fixed, rotary-wing, and unmanned aircraft; generating new nuclear assets and space architecture; and implementing hundreds of smaller improvements throughout the force.
The barbell strategy of investment that Washington relies on overlooks the need to accelerate purchases of proven weapons systems, instead opting to place bets on speculative technologies while making important though transient investments in readiness. To achieve better balance, policymakers should strive to meet three defense priorities simultaneously: (1) restore readiness, (2) pursue the Third Offset Strategy or a similar long-term innovation strategy, and (3) address the modernization requirements of the 2020s.
Congress cannot deliver the stability necessary to achieve these goals through phased, uneven, or delayed defense budgets. Without predictability, industry and the Pentagon will not be able to ramp up fast enough.
Raising the Barbell: The Unfunded Lists
Exigent operational needs and long-term strategic threats underpin the barbell investment strategy. Legislators on Capitol Hill prefer to respond to urgent needs or significant, long-term threats. But refilling munitions stockpiles and pursuing developmental technologies do not pay dividends in the medium term.
This neglect for the medium term manifests most clearly in the services’ unfunded priorities lists, which are submitted to Congress each year to indicate additional need beyond the president’s budget request. As Table 10 shows, procurement has made up the majority of the unfunded priorities lists across the services for the past four years. Given the anemic procurement funding in Trump’s request, it is little surprise that this year’s lists continue this trend and emphasize modernization.
Specifically, the Air Force list included 14 additional F-35 Joint-Strike Fighters, three KC-46 Pegasus tankers, and 12 MC-130J Commando II transports designed for use by special operations forces. Their request totals $11 billion.18
The Navy’s unfunded requirements list includes modifications to ships but not the construction of any new hulls. The $5 billion request, however, does include funding for 24 new aircraft: 10 F-18E/F Super Hornets, six P-8A Poseidons, four F-35 Joint-Strike Fighters, and four CMV-22 Ospreys.19
The Marine Corps’ unfunded procurement request also focuses on aircraft. The $3 billion package includes requests for two MV-22 aircraft, six F-35 Joint-Strike Fighters, four KC-130J Hercules tankers, and two heavy-lift CH-53K King Stallion helicopters.20
Finally, the largest unfunded priorities list emerged from the Army, which submitted a request of $13 billion. To be sure, much of this funding emphasizes readiness restorations for units ground down after steady use. Still, the list includes funding for nine new AH-64D Apache attack helicopters and three UH-60 Black Hawks, along with enough infantry fighting vehicles and main battle tanks to equip a new combined arms battalion—33 Bradleys and 29 Abrams, respectively.21
Estimates for a Rebuild Converge
In January, Sen. John McCain (R-AZ), chairman of the Senate Armed Services Committee, released a report, Restoring America’s Power, calling for an immediate increase in FY18 funding.22 Unlike President Trump’s proposal, Sen. McCain’s strategy-based budget seeks to restore the armed services’ war-fighting and deterrent capabilities through significant investments in modernization. Overall, Sen. McCain’s FY18 proposal would amount to a $700 billion defense budget: a $640 billion base budget with $60 billion in OCO.
Interestingly, as Figure 3 indicates, fully funding the services’ unfunded priorities on top of President Trump’s budget would yield an identical topline for defense.
The unfunded priorities lists (and their attendant boosts to procurement) often serve as the primary point of reference for the House and Senate Armed Services Committees when they conduct markups on annual defense policy bills. Based on rhetoric from individuals in both committees, Congress will likely seek to allocate additional funds beyond the president’s request.24 If Congress wants to begin the necessary military rebuild, it should heed Sen. McCain’s counsel and the distress signals coming from the services and set the defense topline at $700 billion.
Beyond FY18: The Buildup Begins?
According to the Department of Defense (DOD), the president’s FY18 budget request represents the second step in a three-step process for rebuilding America’s military.25 Bookending the FY18 request would be the president’s request last year for $30 billion in additional appropriations—only $15 billion of which Congress actually appropriated—and all budget requests after, including FY2019.26 Steps one and two would both seek to address the military’s immediate war-fighting needs, such as readiness gaps, munitions shortfalls, and end-strength deficiencies. Step three would mark an inflection point. Starting in 2019, the Pentagon promises the budget will shift from repairing the military to rebuilding it.
Presidential administrations have a nasty habit of punting real buildups off to future budget requests. But even if the Pentagon were to be taken at its word that the president’s buildup will get underway next year, there would be numerous on-ramps and other telltale signals hiding in the FY18 budget submission. Budget wonks will strain to find any such indicators of a coming buildup.
Serious defense buildups take time. Defense acquisition cycles demand years of planning. Industry needs time to scale its engineering and manufacturing workforces to increase capacity for extra ships, planes, and vehicles. The same goes for the suppliers and subcontractors that form crucial links in the acquisition chain. By the time this administration decides to launch its buildup, it might have squandered the initiative on Capitol Hill.
Dithering compounds the problem. The government has already lost out on $971 billion in total defense spending relative to the plans set out in its 2012 budget projections—the last budget proposed before the enactment of the Budget Control Act (BCA).27 The 3 to 5 percent real growth that the service chiefs have promised will help remedy this shortfall, but it will not suffice. A rebuild budget should accelerate faster—ideally approaching the 10 percent real growth that Sen. McCain’s budget would represent if enacted—after which growth can stabilize in the neighborhood of 3 to 5 percent.
Such an approach has a precedent. During his first year in office, President Ronald Reagan began the post–Vietnam War military rebuild, immediately boosting defense spending by 10 percent over the previous year. As Figures 4 and 5 show, President Reagan’s first budget emphasized modernization—procurement in particular—which equipped the force to dominate for decades to come. With more money and better investment balance, Congress could replicate the Reagan approach in 2018—and say goodbye to the barbell.
Cause for Concern in the Out-Years
In typical years, the president’s budget request will provide a road map for defense spending not only for the upcoming fiscal year but also throughout the following four years. The so-called Future Years Defense Plan (FYDP) allows legislators in Congress, leadership in the DOD, and industry to make smarter investment decisions and move resources around more efficiently, all crucial tasks in an industry reliant on long-term planning.
President Trump’s first fiscal budget did not include a FYDP, which is not without precedent for incoming administrations. The Obama administration did not produce one during Obama’s first year in office, either.28 While the absence of a FYDP complicates the ability to analyze the long-term implications of Trump’s budget, the president’s overall federal budget request includes topline defense estimates through 2027, which send instructive signals about spending priorities in the budget’s out-years.
The Trump administration claims it could not produce a FYDP until the DOD completed the National Security Strategy, the National Defense Strategy, and the Nuclear Posture Review, which are all ongoing.29 In place of “real” estimates for future spending, the administration deployed placeholders for FY19–FY27, which it derived by growing the base budget at a 2.1 percent annualized growth rate.30
John Roth, then acting under secretary of defense (comptroller), claimed that “the [defense] secretary has not spent any time at all looking at anything beyond FY18.” Later, he insisted that these placeholder estimates “don’t provide anything that’s particularly insightful.”31 As with this defense budget’s topline, however, the administration’s public pronouncements jar with budgetary realities.
The placeholders that the administration uses should raise concerns for two reasons. First, when coupled with simultaneous declines in the OCO account, total defense spending (base plus OCO) grows at a 1.1 percent compound annual growth rate.32 When weighed against inflation, defense spending would decline in real terms during the nine out-years of Trump’s federal spending plan. As Figure 6 illustrates, the administration masks this overall decline through cuts to the OCO account, which drops off from $65 billion in FY18 and eventually flatlines at $10 billion per year starting in FY 2023.33
Second, as shown in Figure 6, the defense projections included in the overall federal budget represent a virtual reproduction of the defense discretionary caps set by the original BCA—that is, before sequestration in 2011 and the mini deals to amend it that followed (e.g., Ryan-Murray or the Bipartisan Budget Act of 2015).34 The Office of Management and Budget (OMB) has acknowledged that it chose $603 billion in FY18 based on levels set by the original BCA, although the mirroring in subsequent years appears to be coincidental.35 Regardless, the administration’s decision to recycle the original BCA betrays a troubling willfulness to continue capping the defense budget at arbitrary levels.
Mixed Messages on the Caps
To have any true chance at rebuilding the military, the Trump administration will have to repeal or significantly amend the BCA. In this respect, the administration’s budget request seems to get things right: The FY18 Defense Budget Overview acknowledges out-front the necessity for a “revision to the defense caps imposed by the BCA,”36 while the budget’s executive summary celebrates how it “reverses the defense sequester.”37
The administration’s estimates for the budget’s out-years, however, convey a different message: The proposal would translate to a six-year extension of the BCA above and beyond its statutory life cycle, which otherwise ends in 2021. Trump’s proposal does not directly grow the base budget; it actually revises the caps to the base budget, which would extend through FY2027 under Trump’s plan.38 The reputed necessity of waiting for a National Security Strategy to formulate genuine defense budget policy cannot possibly explain that decision.
Congress would not vote to pass the BCA again knowing now what they did not know in 2011, yet Trump would give Congress more of the same if they signed onto his plan. To continue spending limits based on absolutely no analysis means the president’s defense buildup could dissipate as quickly as it came.
Fiscal Balance Supersedes All Else
The administration’s explanation for not including a FYDP needs to be recognized for what it is: a convenient distraction. No matter what the administration claims, OMB Director Mick Mulvaney and his team of analysts did not pick future spending levels out of thin air. Unrealistically low growth assumptions in the defense portion of the budget help the administration chart a path toward balancing the federal deficit by 2027—its stated priority for the budget writ large.
By providing cover for Mulvaney to squeeze another component of the discretionary federal budget, not producing a FYDP paved the way for him to boast the administration’s commitment to fiscal responsibility—granted, a commitment predicated on unrealistic cuts to the nondefense discretionary budget, a hollow defense “buildup,” and a litany of suspect economic assumptions. Trump’s defense-spending projections may not reflect defense policy, but they clearly encapsulate fiscal policy.
The White House lists fiscal balancing as the top priority in the executive summary of its FY18 budget summary.39 If there were any doubt about the significance of this gesture, the numbers behind Trump’s first defense budget carry the same message: The White House’s commitment to fiscal balancing supersedes its commitment to rebuilding the nation’s military.
OCO: You Say Goodbye, and I Say Hello
Past administrations have tried and failed to shrink and eventually eliminate the OCO account. Likewise, Trump’s FY18 budget signals the new administration’s desire for the “potential transition of certain OCO costs into the base budget.”40 Like his predecessors, this president will also find the effort fruitless, but likely for different reasons.
On paper, most members of Congress do not like using debt-financed, off-the-books money to pay for current programs. But the president’s budget offers no viable alternative. The OCO account cannot be wished away.
Ultimately, the road to removing the OCO account runs through the BCA. Without genuine and bipartisan efforts to repeal (or modify) the BCA, OCO migration will prove entirely unrealistic. Indeed, Congress is likely to increase the account to fund new troop deployments to Afghanistan and free up money in the base account to devote more resources to procurement needs.
Bipartisanship to the Rescue?
In both word and deed, President Trump’s overall federal budget blueprint affirms that the administration prioritizes balancing the budget above rebuilding the military. Given the president’s clear aversion to entitlement cuts and commitment to slashing taxes, his prioritization of fiscal responsibility should raise serious concerns about his ability to deliver on his already-underwhelming defense-related promises.
Many fellow Republicans on Capitol Hill will applaud the president’s goals—cutting the federal deficit and strengthening the nation’s national security—but they will chafe at the specifics of this proposal, which pays for the small defense increase through significant cuts in the nondefense discretionary portion of the budget. Members of Congress will be wary of squeezing their own constituents with the 2018 midterms fast upcoming.
Republicans cannot deliver a defense buildup alone. The arbitrary discretionary spending caps set by the BCA do not expire until 2021, and any effort to repeal or amend those caps requires changing the law. In past years Congress has fought bitterly over the proper balance between the defense and nondefense components of the discretionary federal budget. Three separate times Democrats and Republicans have forged a compromise, raising caps to both sides of the discretionary federal budget while leaving entitlements untouched.
A bipartisan plan to change the BCA requires fewer nondefense discretionary cuts, perhaps even outright growth. Parity need not be one-to-one, as it was under Obama, but President Trump’s “heads I win, tails you lose” approach will never thread the needle. Congress can show the president the way forward by restructuring the federal budget so that it embraces bipartisanship and begins the defense buildup.
President Trump likely does not know the details of his own budget submission, as he gave great latitude to his budget chief, Mick Mulvaney. But the president must now voice his disapproval with a plan that does not achieve his goals. Although Congress can restructure passable budget plans on a year-to-year basis, sustained investment for a defense rebuild requires presidential leadership.
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