By Shane Mason, Senior Market Analyst
Main Story: Congress Awaits More Detailed FY 2018 Budget
House and Senate defense committees will hold hearings this week, as Congress awaits the release of a more detailed FY 2018 budget from the White House as early as next Monday. HASC will hold hearings on defense acquisition, the military’s personnel posture, and the national security space enterprise. Space policy and small arms requirements are the focus of two SASC hearings. CBO’s new cost estimate for the American Healthcare Act (AHCA) is scheduled for release early next week, and will likely dominate headlines.
President Trump will embark on his first overseas trip on Friday, with stops in the Middle East and Europe. The White House is reportedly close to completing arms deals for Saudi Arabia, the first stop on the president’s itinerary, worth more than $100 billion. The delegation will visit Brussels for a meeting with other NATO heads of state. In a recent white paper, Avascent Analytics assessed how France, Germany, Poland, and the U.K. (among others) would fare if President Trump moves forward with an “America First” foreign policy. Take a look.
Avascent Analytics developed a brief and recorded a podcast on the FY 2017 Omnibus Appropriations Act, which can be found here. The bill yields a 3.8 percent increase in the DoD topline budget from fiscal year 2016 to 2017. Congress increased the DoD topline by adding to the Overseas Contingency Operations (OCO) account, which is not constrained by the Budget Control Act (BCA). Increase in funding disproportionately benefits the Army, whose topline budget will grow 6 percent. The DoD budget appears set to grow under President Trump at a faster rate than the Obama Administration projected, but not necessarily as rapidly as defense hawks would like.
A significant amount of this proposed spending will be going towards O&M. When the December 2016 supplemental is factored in, O&M received over $12 billion in additional funding above the FY16 level, more than both procurement and RDT&E combined. While procurement and RDT&E did, both see major increases over FY16 levels (4.1% and 6.1% respectively), in total dollar terms O&M is so far the big winner. This may reflect an increase in operational tempo over the past year or is simply an attempt to resolve readiness issues. Either way, rising O&M costs may continue to eat into future budget increases.
House Activity – The House returns from its brief recess on Tuesday. The main issue will be two criminal justice measures to be considered pursuant to a rule.
Senate Activity – The Senate will consider the nominations for Deputy Secretary of Transportation and Associate Attorney General. Deputy Attorney General Rod Rosenstein is expected to deliver an all-senators briefing on the firing of FBI Director James Comey this week.
- 5/17 ‘Military Space Organization, Policy, and Programs,’ Subcommittee on Strategic Forces, SR-222 Russell, 2:00pm
- 5/17 ‘United States Military Small Arms Requirements,’ Subcommittee on Airland, SR-232A Russell, 3:30pm
- 5/18 ‘Nominations — Bingen, Karem, Rapuano, Newman,’ Full Committee, SD-G50 Dirksen, 9:30am
- 5/17 ‘Initial Findings of the Section 809 Panel: Setting the Path for Streamlining and Improving Defense Acquisition,’ Full Committee, 2118 Rayburn, 10:00am
- 5/17 ‘Military Personnel Posture: FY 2018,’ Military Personnel Subcommittee, 2118 Rayburn, 3:30pm
- 5/18 ‘Amphibious Warfare in a Contested Environment,’ Seapower and Projection Forces Subcommittee, 2212 Rayburn, 2:00pm
- 5/19 ‘Fiscal Year 2018 Priorities and Posture of the National Security Space Enterprise,’ Strategic Forces Subcommittee, 2118 Rayburn, 9:00am
- HAC-D – 5/18 ‘Coast Guard Requirements, Priorities, and Future Acquisition Plans,’ Homeland Security Subcommittee, 2007 Rayburn, 8:00am
- SAC-D – No hearing scheduled
Government Activity Round-Up
Neither CBO nor GAO released defense-related reports last week. CBO and the staff of the Joint Committee on Taxation are set to release a cost estimate on the AHCA early next week.
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