FY17 Congressional Budget Process at Risk
By Matt Vallone, Senior Analysis Manager
There’s a lot going on in politics right now, between the passing of influential Supreme Court Justice Antonin Scalia and the hotly contested presidential primary campaigns. However, it’s unclear how all of that will eventually impact aerospace and defense. So while as much as we would enjoy going into polling for upcoming presidential contests or seeing who has flip-flopped on judicial filibusters, today we’re going to look at the status of the FY17 budget as the stage shifts from the White House to Congress.
Now that we have a good understanding of what is in the President’s FY17 budget request (as explained in our webinar), it remains to be seen how Congress will respond. Inevitably, significant changes will be made as Congress typically boosts investment activity on select programs while finding savings in O&M or R&D. In addition to potential programmatic changes, the debate to watch this year is over how Congress approaches the topline number for defense spending. Like many other things this year, the conventional wisdom has shifted around on how Congress might approach appropriations this year. In December, as Congress was putting the final touches on the FY16 Consolidated Appropriations Act, the expectation was that the toplines that had been agreed on in October would allow Congress to move forward with ‘regular order’ and pass appropriations bills. Speaker of the House Paul Ryan and Senate Minority Leader Harry Reid were even quoted agreeing on this. However, what appeared to be a relatively straight forward process has already run into fierce headwinds in the House and may face similar obstacles in the Senate.
The primary problem facing the House is that many Republican House members did not support the budget agreement passed in October (only 73 of 246) and many of them do not want to vote for a budget resolution (the legislation that would set toplines for individual appropriations bills) set at that funding level. In particular, the House Freedom Caucus has been very aggressive in saying that the House should pass appropriations at a level under the agreed upon caps. Complicating matters further is that defense hawks, mainly operating in the House Armed Services Committee, are pushing for higher defense spending numbers (primarily through the Overseas Contingency Operations – OCO account) than had been agreed to in October. Speaker Paul Ryan and Budget Committee Chairman Tom Price have been attempting to find a middle ground between these groups but, with almost no prospect of Democratic support for a budget resolution (as it will likely include sharp long-term cuts in spending in order to achieve a balanced budget within 10 years), it’s hard to see how a budget agreement will go forward.
Absent a budget agreement, the House could do what many expect the Senate to do and ‘deem’ the topline numbers set in the 2015 Bipartisan Budget Act bill as the budget numbers for appropriations and move on to consider appropriations bills. This avoids the pitfalls associated with the budget, but also remains vulnerable to the same underlying tension between fiscal hawks and defenses. In addition, given the sharply partisan debates associated with many of the non-defense bills, it is vulnerable to even the slightest of shocks. Last year, the House’s appropriations process was undone by amendments relating to the Confederate flag being displayed on public lands. This year, particularly given the rancor that will be associated with the fight over replacing Justice Scalia, it seems highly likely that the appropriations process could be undone over something similar. That being said, until votes are held it’s always hard to predict exactly what might happen and we look forward to narrating this year’s process for you, however unwieldy and unpredictable it might be.
Congressional Defense Activity
2/23 U.S. Pacific Command and U.S. Forces Korea, Full Committee Hearing
2/23 Defense Health Care Reform, Subcommittee on Personnel Hearing
2/23 Department of Energy Atomic Energy Defense Activities and Programs, Subcommittee on Strategic Forces Hearing
2/24 Iran’s Intelligence and Unconventional Military Capabilities (Close), Subcommittee on Emerging Threats
2/25 Nominations – Honorable Brad Carson (to be Under Secretary of Defense for Personnel and Readiness), Ms. Jennifer O’Connor (to be General Counsel of the Department of Defense), and Mr. Todd Weiler (to be an Assistant Secretary of Defense for Manpower and Reserve Affairs)
2/24 The Challenge of Conventional and Hybrid Warfare in the Asia-Pacific Region: The Changing Nature of the Security Environment and its Effect on Military Planning, Full Committee Hearing
2/24 Department of Defense Fiscal Year 2017 Science and Technology Programs: Defense Innovation to Create the Future Military Force, Subcommittee on Emerging Threats and Capabilities Hearing
2/24 U.S. Strategic Forces Posture, Subcommittee on Strategic Forces Hearing
2/24 Defense Health Agency: Budgeting and Structure, Subcommittee on Military Personnel Hearing
2/25 Full Spectrum Security Challenges in Europe and their Effects on Deterrence and Defense, Full Committee Hearing
2/25 Department of the Navy 2017 Budget Request and Seapower and Projection Forces, Subcommittee on Seapower and Projection Forces Hearing
2/26 Department of the Army 2017 Budget Request and Readiness Posture, Subcommittee on Readiness Hearing
2/26 Ensuring Medical Readiness in the Future, Subcommittee on Military Personnel Hearing
2/24 Hearing to Review the FY 2017 Budget Request and Funding Justification for the U.S. Army
2/24 Oversight Hearing – United States European Command (Closed)
2/25 Budget hearing – Department of Defense
Government Activity Round-up
The DoD comptroller page for budget materials is here. It took all week, but pretty much all of the justification material is now up. The GAO released several reports last week looking at the DoD, particularly of interest is a review of ‘DoD Service Acquisition’ and it’s look at the BRAC process. Both reports (and others on missile defense & defense logistics) are available here.
Other DC/Defense Activity
On Wednesday, 2/24 AEI will host ‘AEI Election Watch: Super Tuesday and Beyond’, featuring commentary from a variety of political experts on the state of the 2016 election. On Thursday, Brookings will host an event on naval strategy, “Uncharted Seas: Maritime Strategy for a New Era of Naval Challenges” with a number of interesting participants, including Navy Secretary Ray Mabus.