Return of the Precipice

Raising the curtain on this fall's fight over the defense budget.

Washington may be quiet in August, but we are headed toward a busy budget season in the fall -- and not one that will reassure the leadership of the Defense Department.

There are three ways the coming months could go. Option one: "the mini-deal." In a fit of reasonableness, some or all of the appropriations bills, including defense, could be passed and land on the president's desk. This is a long shot -- none of the appropriations bills has been passed and landed on the president's desk, and any that violate budget limits and rules face a presidential veto.

Option two is an agreement between Congress and the president that greases the skids for those bills and pushes sequestration off -- forever, for several years, or maybe just for a year. Well, one can dream. But despite Senator Bob Corker's assertion that the White House and compromise-minded senators are talking about their agreements and disagreements, such a deal shows no sign of appearing. Lucy has teed this ball up several times in the last two-and-a-half years, only to have it swept away. Plus, we are heading into the 2014 election season, when dreams of a Republican Senate majority swirl through Mitch McConnell's head, while he and Minority Whip John Cornyn face uncompromising Tea Party opponents in their primaries. And whatever an ad hoc bipartisan group and the White House agree to has to run the Tea Party gauntlet in the House, which will club it to death.

Behind the third door is the grand surprise: We could watch the sequel of what we have seen for the last two-and-a-half years or more: "The Fiscal Cliff: The Return of the Precipice." Scene One: (Are you sitting down?) the appropriators fail and somebody proposes a continuing resolution. John Boehner rushes to the front of the group he purportedly leads, trying to get his caucus to support it. They don't, since he cannot rally the fractious Republicans, so he turns to the Democrats at the last minute (again) to save his bacon. Here, Nancy Pelosi could agree to save him from going over the cliff, or she could let the Republicans be responsible for shutting down the government. Last time, when Newt Gingrich did this in 1995 and 1996, it did not work out so well for the Republicans, but maybe memories are short in the Tea Party. Either way, we eventually get a continuing resolution, with headlines in the meantime full of sound and fury, signifying very little.

Scene Two drives us straight toward the debt ceiling fight, round two, sometime in November. The Congressional Budget Office told us this month that the estimated 2013 deficit through July ($606 billion) was 38 percent lower than it was over the same period in 2012. This might delay the debt ceiling scene by a bit; maybe not. If the debt ceiling fight is delayed, it will hit just as we face another round of sequestration -- 15 days after Congress adjourns (around Christmas) without a budget deal, we get another $100 billion plus reduction in the federal budget. With fun like this, who needs the theater?

We then head straight into Scene Three: the midterm elections of 2014, when there will be no incentives at all to solve the fiscal dilemma.

What this means for federal departments is continuing turmoil and uncertainty. Is the budget process broken? You bet. Can my pet rock -- defense -- deal with it? Yes, but it takes reaching the "acceptance" stage of grief. When Secretary Hagel rolled out his Strategic Choices and Management Review on July 31, he said that cutting $500 billion from the projected defense budgets over the next 10 years would lead to "fielding a force that over the next few years is unprepared due to a lack of training, maintenance, and the latest equipment." He called this "a huge strategic miscalculation that would not be in our country's best interests."

Better than "doomsday" or "a meat axe," but not by much.

I was at the Aspen Strategy Group meeting last week and took away the sense that seasoned observers think such a reduction is not only consistent with what we did after Korea, Vietnam, and the end of the Cold War, but manageable. But there is a lot of push-back on the pace of the reductions. Give us time, or, as Secretary Hagel put it more technically: "The review demonstrated that making cuts strategically is only possible if they are back-loaded. While no agency welcomes additional budget cuts, a scenario where we have additional time to implement reductions, such as in the president's budget, would be far preferable to the deep cuts of sequestration."

The reality is that the Pentagon may not get that time, and it certainly won't get the president's budget. (And "time," in budget land, is a bit like what Samuel Johnson said of patriotism -- "the last refuge of a scoundrel." It is always easier to say the cuts will come way out there in the future, when the current leadership is gone, the world has changed, and different folks are in Congress.)

As hard as it is, DOD needs to bear down. They will not be exempted from the bigger budget fight, at least as far as the White House is concerned. It's time to think outside the box in defense world. Maybe, as Defense News reported this week, it is time to abolish some combatant commands -- like Africa Command, which is busily creating a vital national interest on that continent we never knew we wanted. Or shrink the Army way below 490,000 troops -- perhaps by another 200,000, as retired Chief of Naval Operations Adm. Gary Roughead and Hoover Institution scholar Kori Schake have proposed. Or think even more radically: Maybe consider abolishing a service, like the Air Force, and let the Army, Navy, and Marines fly planes more integrated with ground and sea missions, as Prof. Robert Farley of the University of Kentucky has proposed.

I'm not saying I endorse all of these, but they are outside the box and open up debate in a way we need to. And if DOD really wants to maintain a ready force, properly armed for its missions, Secretary Hagel and Deputy Secretary Ash Carter need to take a much more aggressive stance on cutting the "back office" at DOD than the tepid 10-year savings of $60 billion dished up by the SCMR.

With more than 42 percent of the defense budget being spent on overhead, three-quarters of it in the service bureaucracies, there is a lot of work to be done. Buying "time" will not get it done. It will just let the back office sit around until the next secretary or the next administration comes in and starts all over again. If the savings come slowly, there is no time like the present to start; waiting won't make them come faster.

Sequester is a pain, for sure. But it has been my view for some time that rather than wait for the deal that doesn't seem likely to come, DOD should just step up to sequester-level cuts, roll up their collective sleeves, and get on with it.

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National Security

The Shoots of Hope Spring Eternal

But when it comes to the federal budget, are they weeds?

Courtesy of the sequester, the defense budget is due to decline around $52 billion next year, cutting about $500 billion from the current baseline over the next 10 years, unless Congress and the White House arrive at a different understanding about spending and revenue policies. Domestic discretionary spending is in for a similar hit without a budget bargain.

With Congress safely out of town until September 8, it is worth taking a look at the prospects for a deal. They haven't been very good for the last three years, but, every once in a while, somebody pushes a phantom green shoot through the solid pavement of discord in Washington, and, briefly, people start to wonder.

The latest version of hope comes from Sen. Bob Corker (R-TN), who, with a new "gang" from the Senate, said he had been spending a lot of time with the White House Chief of Staff Denis McDonough, Deputy White House Chief of Staff for Policy Rob Nabors, and Office of Management and Budget Director Sylvia Matthews Burwell, according to John Bennett at Defense News.

What the two gangs are talking about is not clear -- mostly what they agree and disagree on. Nothing new there -- the "agrees" and "disagrees" have been pretty well known for several years. Maybe something about mandatory spending cuts substituting for discretionary spending cuts, Corker suggests. Of course, it's not clear what that means, since mandatory spending cuts have been hanging around as an option for a while, even as part of the president's budget request sent up to Congress in April.

But Corker is pushing optimism: "People are having serious discussions now about how to go forward," reported Bennett. Wait a second. Does that mean no previous discussions were serious? Hardly the case; there have been discussions forever and both sides have been dreadfully "serious." And Lindsey Graham (R-SC), who has been participating in the latest round, is "increasingly hopeful."

This is a little like Charlie Brown and Lucy with the football gig. None of the pieces on the table is new. Senior Democrats like Chuck Schumer and senior Republicans like Corker, Graham, and John McCain (R-AZ) have been having these "conversations" so many times that even Punxsutawney Phil is getting bored with the repetition.

And it's the same old, same old, set of issues. Will Republicans put revenues (taxes) on the table? Will the Democrats put mandatories on the table? Will domestic discretionary spending pay the price for a higher level of defense spending than sequester would provide? Or will there have to be balanced cuts between defense and domestic discretionary spending?

Moreover, will Senate Republicans even be able to bring very many of their tribe to the table when it comes to a vote? And does any of that matter when John Boehner (R-OH) cannot control his right wing in the House, which is adamantly opposed to putting taxes on the table and appears quite comfortable allowing defense and domestic discretionary spending cuts to kick in through the sequester.

It turns out that the sequester is simply politically convenient. It is like a base closure round for the entire federal budget -- nobody has to take responsibility for the cuts because an automatic process does the job. And then everyone can complain about it and blame someone else. Pretty sweet if you want the cuts to happen, cannot specify what they should be, and don't want your fingerprints on them.

Not everybody thinks a deal is actually in the offing. Stan Collender, a DC-based budget guru, thinks Washington is headed in the opposite direction: toward "budget bedlam" this fall. The political hurdles to an agreement are daunting, even to the most avid participant in extreme obstacle course games. There are no appropriations bills, as yet, for the coming fiscal year; we are back in the land of the continuing resolution. And the debt ceiling comes up in November. And there's a new sequester opportunity sometime in January 2014. And then there's the president's Fiscal Year 2015 budget submission -- before the FY 2014 budget has even come alive.

Pay no attention to the looming midterm elections next year, with Tea Party primary candidates already lining up to take on any Republican who dares to play "let's make a deal." It all sounds eerily familiar.

Count me with Collender. That shoot sticking out of the pavement is just a weed waiting for a House Tea Party weed whacker to come along and cut it down to size. And weeds, being weeds, will just grow back again. And decent gardeners know what I mean.

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