By Matt Vallone, Director of Research & Analysis
Main Story: Trump Budget Deal Scrambles Fall Schedule as Senate to Consider FY18 National Defense Authorization Act (NDAA)
Last week saw an unexpected resolution to the pending end of Fiscal Year 2017. In a meeting with Congressional leaders, President Trump agreed to attach a three month extension of the debt ceiling and a three month continuing resolution to legislation containing aid to victims of Hurricane Harvey. In short order the Senate and House voted for this legislation and it is set to become law. This deal came as a surprise as it represented an instance of the White House effectively siding with the proposal of House Minority Leader Nancy Pelosi and Senate Minority Leader Chuck Schumer over Republican leadership. However, from the point of view of this newsletter it largely reflects an expected delay in a real debate over spending levels. As noted last week, it has been routine since 2010 for there to be some delay in defense appropriations, with defense appropriations held hostage to broader disputes over non-defense spending. It remains to be seen what level of defense spending will come out of the eventual budget deal between Congressional Republicans, Congressional Democrats, and the White House.
Following last week’s budget deal, the Senate and the House will be able to spend this week focused on legislation that advances the ball on authorization and appropriation of spending for FY 2018. In the Senate, after a last-minute switch that saw the Senate shelve consideration of the NDAA in favor of disaster relief and the debt ceiling, the FY 2018 NDAA will be front and center. A key question will be how Senate leadership, particularly Senate Armed Services Chairman John McCain, chooses to handle potentially polarizing floor amendments. Issues around North Korea, Afghanistan, and the fate of transgender service members could all pose roadblocks to a bill that came out of committee with bipartisan support. On the House side, leadership expects to complete consideration of H.R. 3354, the Make America Secure and Prosperous Appropriations Act, a minibus that contains all the remaining appropriations bills following the passage of a security minibus prior to the August refresh.
House Activity – The House has cancelled votes for Monday, in recognition of the number of members still at home dealing with Hurricane Irma. When it gavels into session on Tuesday it will work through a variety of suspension bills before moving to complete consideration of H.R. 3354. Later in the week it is expected to take up a second rule bill dealing with the removal of illegal immigrants who are members of criminal gangs.
Senate Activity – The Senate will move to consideration of the FY 2018 NDAA on Monday evening. That should take it through this week and possibly into the next.
- SASC – No hearings this week (typically when the NDAA is on the floor you will not have any hearings from the committee as it is busy managing the bill)
- HASC – 9/12 ‘Securing the Peace After the Fall of ISIL’, Full Committee Hearing, 2212 Rayburn, 2pm
- HAC-D – No scheduled hearings
- SAC-D – No scheduled hearings
Government Activity Round-Up
Nothing of interest at CBO, but there are two reports of interest at GAO. First, GAO looked at the scope of work needed to better estimate modernization requirements and costs of the National Nuclear Security Administration’s uranium processing facilities. The GAO evaluation was that progress was made towards evaluating the cost of a new facility, but that there remained areas of weakness in the overall modernization program. The second, and seemingly more timely report looked at Navy Readiness. This was in service to the HASC hearing last week on the topic, but it also reflects increased interest given the multiple collisions at sea the USN has experienced in the past year, as well as the sense that aviation mishaps are increasing as well. Overall, the GAO’s report strengthened the USN’s argument that ‘increased deployment lengths, shortened training periods, and reduced or deferred maintenance to meet high operational standards… resulted in declining ship conditions and a worsening trend in overall readiness.” Specifically, this report calls out three issues: degraded readiness of ships homeported overseas, crew size reductions contributing to crew overwork, and an inability to complete maintenance on time. More depressing analysis at the link.
In less depressing news, Avascent released a few items in the last few weeks we’d encourage you to take a look at. First, Dr. Dominik Kimla, a Warsaw-based consulting associate at Avascent, and Joe Walsh, the head of Avascent’s London office, produced a paper looking at the results of Poland’s most recent Strategic Defence Review. It’s great analysis from experts in the market. Second, Toshi Nabeta, Avascent’s Director of Japan Operations, and Aaron Lin, Avascent Analytics’ lead Japan Market Analyst, talked about the Japanese defense budget and trends in the Japanese defense industry in the second of Avascent’s new ‘Global Narratives’ series. Lastly, on August 30, Ben Goodlad, Avascent Analytics’ new UK-based Analysis Manager, put together a piece looking at demand for SM-3 and Aegis Ashore in Japan following the latest round of DPRK tests that is well worth reading.
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