thedrifter
02-08-09, 07:17 AM
Economic crisis could affect defense budget
By Leo Shane III, Stars and Stripes
European edition, Sunday, February 8, 2009
WASHINGTON — Troops’ pay raises and personnel benefits could be trimmed by the ongoing recession, but lawmakers and military analysts say that’s not going to happen this year.
Instead, as the White House prepares its fiscal 2010 defense budget, major weapons systems and long-term equipment development are more likely to feel the economic pinch first.
Congress has already approved more than $680 billion in federal funding for fiscal 2009, including war supplemental budgets, according to the Congressional Budget Office. Last week defense officials brushed aside rumors of a 10 percent cut in base military spending for fiscal 2010, saying they are still in discussions with White House planners on final budget totals.
Those details won’t be publicly announced for several more weeks, and President Barack Obama is expected to announce only general spending priorities before that.
But in recent meetings with lawmakers, Secretary of Defense Robert Gates and Joint Chiefs Chairman Adm. Mike Mullen have warned that the nation’s ongoing economic crisis will undoubtedly affect the upcoming defense budget.
"With two major campaigns still going, the economic crisis and resulting budget pressures will force hard choices on this department," Gates said at a Senate hearing last month.
What won’t be cut
Senate Armed Services Committee Chairman Carl Levin, D-Mich., told reporters last week that he expects "significant changes" in defense funding when the budget is unveiled, although he hasn’t received details from the Pentagon or White House yet.
But he doesn’t expect troops in Iraq or Afghanistan to feel the impact of those budget changes. Personnel remains a priority, he said, and getting combat-damaged equipment repaired or replaced is critical to keeping the force ready for future missions.
"We’re going to have to provide for necessary reset, even at the expense of modernization," he said.
During his campaign Obama publicly supported plans to increase the size of the Army and Marine Corps, and touted plans to take care of military families while their spouses serve overseas. Any change from those plans could bring a harsh public backlash, according to Robert Work, vice president at the Center for Strategic and Budgetary Assessments.
"I think the last thing that could be cut is those personnel funds," he said. "A lot more (financial trouble) would have to happen before he’d start looking at pay and benefits."
Forgoing a military pay increase altogether, even with pressures on the national budget, would be a difficult political move while overseas deployments continue, Work said.
The average pay raise for troops has stayed at least 0.5 percent above private sector increases for the last 10 years, and simply keeping it equal with inflation projections for 2010 would guarantee a raise of about 3 percent.
Lawmakers in both the House and Senate have promised to focus on health care for returning troops in the early part of their new legislative session, making that another unlikely place for cost-cutting.
What might be cut
But the legislators have promised to make defense acquisition reform another focal point, examining how contracts are awarded and watched.
The Government Accountability Office reported last fall nearly $300 billion in cost overruns in major defense weapons systems, with one in four contracts costing at least 25 percent more than initially promised.
Levin singled out production of the F-22 Raptor, the Navy destroyer plans and missile defense plans as areas for additional scrutiny because of high costs and tighter budget requirements. But he added those aren’t the only ones that could see funding cut or halted.
The Obama administration has criticized the Army’s Future Combat System program and its $150 billion-plus price tag so far, making it another potential target for cuts.
Work said he expects training to remain a military priority as the services work to integrate lessons learned from Iraq and Afghanistan into future operations, but cuts in flight hours or ship steaming days could help control costs.
And the analyst said that if personnel issues escape cuts in the fiscal 2010 budget, that’s not a guarantee they will remain fully funded in 2011, especially if the economic outlook worsens over the next year.
Stephen Daggett, defense policy specialist for the Congressional Research Service, told House members Feb. 4 that the cost for pay, housing allowances, health care and other benefits rose from about $55,000 per person eleven years ago to more than $80,000 per person this fiscal year.
Changes in the basic allowance for housing made up nearly a third of that increase, and expanded retirement/disability benefits another third. Cuts to weapons systems, even multi-billion dollar ones, can only have limited impact if those kinds of personnel costs keep rising, he said.
Obama’s full budget is expected to be delivered to Congress by April, and lawmakers have said they hope to pass the defense budget by Oct. 1, the start of fiscal 2010.
Ellie
By Leo Shane III, Stars and Stripes
European edition, Sunday, February 8, 2009
WASHINGTON — Troops’ pay raises and personnel benefits could be trimmed by the ongoing recession, but lawmakers and military analysts say that’s not going to happen this year.
Instead, as the White House prepares its fiscal 2010 defense budget, major weapons systems and long-term equipment development are more likely to feel the economic pinch first.
Congress has already approved more than $680 billion in federal funding for fiscal 2009, including war supplemental budgets, according to the Congressional Budget Office. Last week defense officials brushed aside rumors of a 10 percent cut in base military spending for fiscal 2010, saying they are still in discussions with White House planners on final budget totals.
Those details won’t be publicly announced for several more weeks, and President Barack Obama is expected to announce only general spending priorities before that.
But in recent meetings with lawmakers, Secretary of Defense Robert Gates and Joint Chiefs Chairman Adm. Mike Mullen have warned that the nation’s ongoing economic crisis will undoubtedly affect the upcoming defense budget.
"With two major campaigns still going, the economic crisis and resulting budget pressures will force hard choices on this department," Gates said at a Senate hearing last month.
What won’t be cut
Senate Armed Services Committee Chairman Carl Levin, D-Mich., told reporters last week that he expects "significant changes" in defense funding when the budget is unveiled, although he hasn’t received details from the Pentagon or White House yet.
But he doesn’t expect troops in Iraq or Afghanistan to feel the impact of those budget changes. Personnel remains a priority, he said, and getting combat-damaged equipment repaired or replaced is critical to keeping the force ready for future missions.
"We’re going to have to provide for necessary reset, even at the expense of modernization," he said.
During his campaign Obama publicly supported plans to increase the size of the Army and Marine Corps, and touted plans to take care of military families while their spouses serve overseas. Any change from those plans could bring a harsh public backlash, according to Robert Work, vice president at the Center for Strategic and Budgetary Assessments.
"I think the last thing that could be cut is those personnel funds," he said. "A lot more (financial trouble) would have to happen before he’d start looking at pay and benefits."
Forgoing a military pay increase altogether, even with pressures on the national budget, would be a difficult political move while overseas deployments continue, Work said.
The average pay raise for troops has stayed at least 0.5 percent above private sector increases for the last 10 years, and simply keeping it equal with inflation projections for 2010 would guarantee a raise of about 3 percent.
Lawmakers in both the House and Senate have promised to focus on health care for returning troops in the early part of their new legislative session, making that another unlikely place for cost-cutting.
What might be cut
But the legislators have promised to make defense acquisition reform another focal point, examining how contracts are awarded and watched.
The Government Accountability Office reported last fall nearly $300 billion in cost overruns in major defense weapons systems, with one in four contracts costing at least 25 percent more than initially promised.
Levin singled out production of the F-22 Raptor, the Navy destroyer plans and missile defense plans as areas for additional scrutiny because of high costs and tighter budget requirements. But he added those aren’t the only ones that could see funding cut or halted.
The Obama administration has criticized the Army’s Future Combat System program and its $150 billion-plus price tag so far, making it another potential target for cuts.
Work said he expects training to remain a military priority as the services work to integrate lessons learned from Iraq and Afghanistan into future operations, but cuts in flight hours or ship steaming days could help control costs.
And the analyst said that if personnel issues escape cuts in the fiscal 2010 budget, that’s not a guarantee they will remain fully funded in 2011, especially if the economic outlook worsens over the next year.
Stephen Daggett, defense policy specialist for the Congressional Research Service, told House members Feb. 4 that the cost for pay, housing allowances, health care and other benefits rose from about $55,000 per person eleven years ago to more than $80,000 per person this fiscal year.
Changes in the basic allowance for housing made up nearly a third of that increase, and expanded retirement/disability benefits another third. Cuts to weapons systems, even multi-billion dollar ones, can only have limited impact if those kinds of personnel costs keep rising, he said.
Obama’s full budget is expected to be delivered to Congress by April, and lawmakers have said they hope to pass the defense budget by Oct. 1, the start of fiscal 2010.
Ellie