Tuesday’s elections were a significant victory for the Republican Party, which took control of the Senate and expanded its majority in the House of Representatives. These elections will result in significant changes that will directly and indirectly impact the defense space.
First, Republican control of the Senate will give Senator John McCain (R-AZ) the chairmanship of the Senate Armed Services Committee (SASC). Given his frequent and intense criticisms of the F-35 and Littoral Combat Ship (LCS), this may pose problems for both of these programs. In addition, chairing SASC will provide McCain a platform to push for more hawkish responses to foreign crises, such as the ongoing conflict with ISIS and Russia’s unconventional war with Ukraine. Additionally, Senator Bob Corker (R-TN) will take over as chair of the Senate Foreign Relations Committee. While not as vocally hawkish as McCain, he has expressed similar concerns over the administration’s foreign policy and will now have a broader platform to push for a more robust response.
Senator Thad Cochran (R-MS) is likely to take over both as chairman of the Senate Appropriations Committee and the Senate Appropriations Subcommittee on Defense (SAC-D). A long-time appropriator, Senator Cochran will ensure the shipyards in his state are given steady business and will likely push to remove the Department of Defense from the restrictions of the Budget Control Act of 2011, also known as the sequester. Additionally, Senator Jeff Sessions (R-AL) will take over as chair of the Budget Committee. A strong proponent of cutting spending but also a member of the Senate Armed Services Committee, it is unclear how he might respond to efforts to exempt the Department of Defense from sequestration.
On the House side, the retirement of Representative Buck McKeon (R-CA) will likely make Representative Mac Thornberry (R-TX) the new chairman of the House Armed Services Committee (HASC). However, he will face a challenge from Representative Randy Forbes (R-VA) for the gavel, though it is likely the Forbes challenge is aimed at longer-term positioning, rather than immediate control of the Committee. In either case, there should be little significant change in direction, as HASC is likely to continue to push for increased defense spending and a more aggressive response to foreign challenges.
On the appropriations front, Representative Rodney Frelinghausen (R-NJ) will remain chair of the House Appropriations Committee Defense subcommittee and Representative Hal Rogers (R-KY) will remain chair of the full Appropriations Committee. Both of them will also push to remove sequestration, though they will face stiff resistance from others in leadership. Worth noting is that Representative Tom Price (R-GA) will likely take over for Representative Paul Ryan (R-WI) as chair of the Budget Committee. A strong supporter of sequestration, he would be a critical player in any attempt to exempt the Department of Defense from current budget limitations. On the plus side, Representative Ryan moving to Ways and Means may indicate that tax reform will yet again be on the table as a possible priority in the 114th Congress. Legislation reducing the top tax rate could be a boon to defense firms, though, as always, the devil will be in the pay-for details.
Other considerations would be that Senator Mark Udall (D-CO) loss will remove one of the harshest critics of the NSA/CIA from Congress. Senator Jack Reed (D-RI) taking over as Ranking Member on SASC is also worth noting, as he will bring a markedly different approach than the previous lead Democrat, Senator Carl Levin (retiring, D-MI). Reed, a veteran of the 82nd Airborne, has long been viewed as an expert on defense issues. Lastly, a number of former members serving on SASC and HASC will need to be replaced, reshuffling the make-up of both committees’ backbenchers.
In terms of what all this means for the defense spending, there are a number of questions that will need to be answered before an assessment can be made of what the size of DoD’s budget will be in FY 2016. The first question will be how the Republican leadership and the two new Budget chairs (Price & Sessions) decide to approach the FY 2016 budget. In 2013, prior to the Ryan-Murray agreement that suspended sequestration, House Republicans passed a budget that would have exempted the Department of Defense from the sequester through offsetting cuts to other spending. However, the resulting non-defense spending levels were so low as to make it almost impossible to pass non-defense related appropriations bills (none of which made it to the floor in 2013). It is possible that Republicans will attempt this strategy again with the hope that their expanded House majority and control of the Senate make such a legislative approach viable this time.
However, there remain sizeable contingents of Republicans in both chambers who are supportive of the limits of the Budget Control Act and would likely oppose any measures that raise spending relative to those benchmarks. In addition, more moderate Republicans may have trouble accepting significant cuts to other non-defense programs going into what may be a more difficult electoral environment in 2016. This budget approach would also pose limited appeal to Democrats in either chamber, making the numbers on such a vote very close.
The overall direction of the budget resolution will likely be clear by early spring 2015, but the real fight may occur as the Appropriations Committees attempt to move individual appropriations bills through Committee and to the floor. This will likely take longer to play out. If only defense related appropriations (DHS, VA/MilCon, Defense, etc.) have passed by August, the chances of success are low for this strategy.
Once the budget choices of the new Republican Congress have been made, and budget bills passed, the focus will shift to the White House’s response and possible vetoes. While the White House would likely threaten a veto of any appropriation legislation that exempted Defense through cuts to other spending, it is unclear whether such a threat would be sustained. It is likely that the White House will face a variety of provisions it views as unacceptable in any spending legislation, and which fights they choose to engage will likely decide whether increased defense spending would stick in any eventual budget deal. Upcoming negotiations in the lame duck session may provide a window into how such negotiations would eventually proceed, but until both chambers are in Republican control and new members are seated, there will remain considerable uncertainty as to how this would play out.
In sum, the 114th Congress will feature new leadership that will likely be more hawkish and supportive of defense than the 113th. On its face, this would appear to make the chances of sequester hitting the Department of Defense in FY 2016 less likely. However, there remains considerable uncertainty associated with the budget process and how eventual negotiations between a Republican Congress and the Obama White House will proceed.