Both houses of Congress deal blows to DoD’s cost-cutting proposals

In two votes yesterday on separate versions of the annual defense authorization bill, the House shot down nearly every one of the Defense Department’s proposals to cut its costs, and the Senate allowed just a few.

With regard to the Pentagon’s requests to trim weapons systems, personnel spending and other major expenses, the final bill the full House of Representatives overwhelmingly passed Thursday differed very little from the version the House Armed Services Committee approved two weeks ago. In it, lawmakers rejected everything from another round of base closures to DoD’s requests to retire weapons systems, mostly ignoring a White House veto threat.

Later in the day, the Senate Armed Services Committee passed its version of the DoD authorization bill, and lawmakers acceded to some of the cost cutters in the department’s 2015 budget plan — but not all.

Few details on Senate bill

As of Thursday night, senators had not released any written details of their bill, which they marked up behind closed doors. However, Sen. Carl. Levin (D-Mich.), the chairman of the Armed Services Committee, told reporters late Thursday afternoon that the panel accepted a few of DoD’s proposals, including one that would raise copays for prescription drugs when TRICARE beneficiaries buy them at retail pharmacies instead of via mail order or at a military treatment facility.


However, the committee rejected the Pentagon’s proposal to combine TRICARE’s three separate health insurance plans into one.

Also, the Senate committee went along with DoD’s proposal to gradually reduce service members’ tax-free housing allowances so that they cover only 95 percent of rent expenses in a given geographic area. And it signed off on the Pentagon’s request to provide a 1 percent pay increase next year instead of the 1.8 percent raise that the current formula requires — one of the few areas of spending reductions that the House also agreed to.

But the preliminary Senate bill, like the House’s final one, rejected many of the Defense Department’s requests, including cutbacks to military commissary subsidies and a reduction in the military’s real estate footprint through additional base closures.

“There was disagreement within the committee about this,” said Sen. James Inhofe,” (R-Okla.), the Armed Services Committee’s ranking member. “But it’s been my experience, having been here through all five BRAC rounds that they always lose money for the first two or three years. If there’s ever a time when we can’t afford to lose money unnecessarily, it’s now.”

House, Senate take different tack on weapons systems

With regard to weapons systems, the Pentagon has proposed to retire the Air Force’s entire fleet of A-10 and U-2 aircraft, reallocate the Army’s helicopters between the active Army and its reserve components, remove 11 Navy cruisers from service and also begin the process of retiring the aircraft carrier U.S.S. George Washington unless sequestration is repealed.

The House rejected each of those ideas. The Senate allowed a few, Levin said.

“The bill allows the Navy to move forward with its plan to lay up cruisers for overhaul, we allow the Army to move forward with its proposed aviation restructuring including the retirement of a number of types of helicopters, but we also provide for the establishment of an independent commission to review those decisions,” Levin said. “And the bill shifts money from the Global Hawk to the U- 2, but it does not require the Air Force to retire or keep either aircraft.”

But the Senate bill, like the House version, requires the Air Force to keep the A- 10 in service, and also blocks the retirement of the George Washington.

“We concluded it would be unacceptably wasteful to retire a multibillion ship that still has 25 years of useful life ahead of it,” Levin said. “We were not able to find enough money to pay for all of the refueling of that carrier, but we did authorize the Navy to take up to $650 million from other programs we believe are under-executing and use that money to keep the carrier alive. We believe the money will be there to do just that.”

Disagreement over top-line

The two houses also differ in the amount of money they authorize for DoD. The House wound up with a total top line figure of $601 billion. The Senate version matches the Obama administration’s own proposal: $514 billion. The largest reason for the difference is that the House is continuing to rely on the overseas contingency operations account that’s currently funding the war in Afghanistan. Its version of the bill, for example, relies on those OCO funds — which are not subject to sequestration — to save the A-10. The White House budget proposal for DoD will likely grow by tens of billions of dollars in the next few months as well, once the administration submits its request for 2015 OCO funding.

But the Senate bill assumes Congress as a whole is unlikely to keep putting money into the OCO accounts once U.S. troops are out of Afghanistan at the end of this calendar year. The measure does not try to fund any programs with wartime accounts, even though military officials have been adamant that they will need OCO money for several more years in order to repair and reset equipment coming back from the war.

In any case, the House, Senate and White House proposals all exceed the DoD spending caps lawmakers agreed on last year by tens of billions of dollars. Under the current formula for sequestration, the Pentagon is limited to $496 billion in spending during 2015 unless the law is changed. Under that same law, the caps will force another $9 billion in cuts in 2016.

Rep. Buck McKeon (R-Calif.), the chairman of the House Armed Services Committee, said he believes the defense bill the House passed on Thursday will help DoD cut its costs, even though it rejected nearly all of the Pentagon’s own ideas. But he said neither the House nor the Pentagon’s plans to save money will achieve the kind of savings the military will need if the current defense budget caps remain in place.

“This bill begins the process of a comprehensive defense reform effort with a series of provisions on institutional, acquisition, security and strategy reforms,” he said. “However, we must recognize that cost savings alone do not compensate for the $1 trillion the department of defense has seen cut from its budget. The padding has been cut, and the department is now cutting into the bone.”

House Dem: ‘We’re going to hope things get better

Rep. Adam Smith (D-Wash.), the House Armed Services Committee’s ranking Democrat, agrees that sequestration has been harmful to DoD and also wants to repeal it. He voted in favor of the House bill on Thursday, but said it wasn’t an easy call. He said it includes many provisions he likes, but it also ignores the fact that DoD needs to find sustainable ways to trim its expenses.

“We are going to have substantially less money for defense over the next 10 years than we thought we were going to have,” he said. “That’s true even if sequestration goes away. If sequestration stays in place then we’re really going to face a challenge. So the question is how are we going to restructure our defense plans to deal with the fact that we have less money? The answer in this bill is we’re not going to deal with it this year. We’re going to hope things get better, and maybe deal with it next year.”

The final bill the House approved 325-98 on Thursday did not involve many difficult votes for members of Congress — partially because the defense authorization bill is one of the few pieces of work that is still considered “must-pass” legislation every year — but also because none of the decisions leading up to the final vote were very difficult. Smith and several other colleagues wanted to force votes on whether DoD should be allowed to conduct another round of BRAC, whether the Navy should be allowed to retire its ships and several other issues, but the House Rules Committee ultimately deemed those amendments “out of order.”

The final bill that will go to the President’s desk will take shape only after the House and Senate form a conference committee to sort out their differences, but first, the full Senate needs to schedule a debate on its version of the bill. Levin declined on Thursday to predict when that will happen.


DoD’s 2015 budget envisions smaller military with less generous benefits

Another budget quandary for DoD: What if war funding dries up?

Despite objections, Air Force sees no good alternatives to eliminating aircraft fleets