110th Congress—Defense Spending Issue Looms

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Introduction

A clash over defense spending looms as the new year gets underway. The costly wars raging in Iraq and Afghanistan, coupled with political change in Washington, as well as earlier decisions to approve a number of high-cost weapons systems, will make the debate over FY2008 defense spending particularly contentious. As always, the three services—the Army, the Air Force, and the Navy (which also contains the Marine Corps)—each view their particular needs as under-funded priorities. In Congress, leaders in both parties say the practice of paying for combat operations through “Emergency Supplemental Spending Bills” has gotten out of hand and want more of this money folded into the regular budget process. With public confidence in the Bush administration’s Iraq policies low and Democrats taking control of the key congressional committees, talk of change fills the air.

What has the Iraq War actually cost?

In the months leading up to the Iraq War, a spirited debate about its potential cost in U.S. treasure raged among academics and policy groups, and within the Bush administration. Before the March 2003 invasion, when Lawrence Lindsay, a White House economic advisor, estimated war costs over $200 billion, the Office of Management and Budget Director Mitch Daniels called it “the outer edge of speculation,” pegging the cost at $50 billion to $60 billion. Yet by September of 2006, the Congressional Budget Office estimated, over $300 billion had been appropriated for the war, and it predicted the cost would rise as high as a trillion dollars by the end of the decade if, as Department of Defense (DOD) budget planners say, a sizeable U.S. force remains in the country until 2010. One of the few forecasters even close—Yale economist William Nordhaus, whom the war’s supporters derided back in June 2003 for his estimates of $500-$600 billion (PBS) over a decade, turned out to be overly optimistic. This CFR Backgrounder provides more detail on the war’s costs.

What are “emergency supplementals” and why are they controversial?

Emergency supplemental funding processes exist to fund unforeseen national emergencies, such as war, floods, and famine. With regard to those being used to fund the war, however, there is concern they have evolved into a way to bypass legislative scrutiny and avoid federally mandated spending limits meant to hold down the deficit. Since the attacks of Sept. 11, 2001, most of the costs associated with fighting in Afghanistan and Iraq, as well as some costs critics see as unrelated, have been funded by supplementals. A case in point is the latest draft of the Defense Department’s emergency supplemental request, obtained by CFR.org, which has been submitted to the Office of Management and Budget and will ask Congress later this month for another infusion amounting to $99.7 billion for the remainder of FY2007. This is above and beyond the $70 billion “bridge fund” Congress approved earlier this year, and the $462 billion baseline funding in the regular FY2007 defense budget. It brings total spending for this year to more than $632 billion.

Both Democrats and Republicans in Congress have called for an end to this practice. They note that, while emergency funding was used to pay for the early years of combat in Vietnam, for instance, the costs ultimately were folded back into the regular defense budget—affording Congress the ability to hold hearings and more systematically consider requests. “It’s disingenuous of the administration to claim we have no idea what Iraq needs will be and so we can’t budget for them,” says Stephen Biddle, CFR senior fellow for defense policy. “It could and should be handled through normal channels, but the services have come to view the supplementals as bulletproof and so they’re dumping all sorts of things into them that hardly qualify as emergencies.”

How does the current DOD supplemental request break down?

About 70 percent of the funds, according to a draft obtained by CFR.org, is earmarked for the Army and the Marine Corps, whose forces bear the brunt of the combat in Iraq and Afghanistan. This part of the request likely will prove the least controversial, according to James McAleese, a defense industry attorney and principal of McAleese & Associates. Much of the Army and Marine request pays for personnel costs such as hazard pay, reenlistment bonuses, training, and other costs of maintaining forces deployed in the combat zone; and for "Operations and Maintenance," including repair and refitting of damaged or worn out equipment, fuel, and other logistics as well as some procurement of new equipment to replace equipment destroyed in combat.

Some key figures for the Army and Marines in the draft request:

• $691 million for the Army to replace, repair, or upgrade damaged aircraft, which is likely to be Apache, Blackhawk, and Chinook helicopters.
• Some $5.4 billion to replace a range of Army tactical trucks, ranging from Humvees to heavy tractor-trailers, which have taken a beating during the war.
• $7.4 billion for communications and electronics, including radio systems, whose burnout rate in the desert environment has been alarmingly high, as well as small unmanned aerial vehicles and night vision equipment.
• $3 billion to upgrade Army Bradley fighting vehicles and Abrams tanks. There appears to be no significant money set aside for additional Stryker vehicles—the wheeled armored alternative to tracked tanks championed by some "transformation" advocates—beyond the seven Stryker brigades previously funded.
• A $2.1 billion overall request for the Marine Corps, including $964 million in "engineer and other equipment," presumed to be largely comprised of "force protection" systems designed to defeat IEDs (Improvised Explosive Devices).

Additionally, some $3.8 billion and $6 billion are set aside, respectively, for the Iraqi and Afghan security forces, with the larger amount earmarked for Afghanistan.

What parts of the latest supplemental request face congressional scrutiny?

Yes, requests from the Navy and Air Force that might seem less obviously related to the Iraq and Afghan conflicts. In part, this is by design: In October, a memo from Deputy Defense Secretary Gordon Englund urged service chiefs to submit in the supplemental request any item related to the larger “war on terror,” not just the Iraq and Afghan conflicts. This led to early draft requests that were much larger. “Clearly, the Democrats have already made their presence known, because otherwise the supplemental could possibly have been 130 to 150 billion” dollars, says McAleese. “The incoming Democratic Congress already has had an impact in driving compromise with the administration.”

Even after internal pressure from DOD to hold down the request, it remains of historic proportions, and includes a $3.9 billion Air Force plan for acquisition of several new high-performance fighters, the F-35, and several new C-130J transports. This is in addition to significant funding for Navy and Air Force operations ($3.8 billion and $.7.7 billion respectively) likely to draw requests for more specifics. Another possible congressional target: an Air Force request for $1.2 billion in “basic research.”

How is the new Democratic-led Congress likely to act?

Lawmakers on both sides of the aisle in Congress have expressed dismay at the increasing size and frequency of the supplemental requests. Sen. John McCain, (R-AZ) added a provision to the FY 2007 defense authorization act compelling the administration to put future such requests through normal channels. However, President Bush released a “signing statement” to the bill later which made clear he would submit emergency requests as he saw fit, leaving the issue unresolved. Since winning control of Congress in November 2006, Democrats, too, have expressed an interest in seeing the war’s costs subject to the scrutiny of the normal budget process, which implies more hearings and sharper oversight. Last month, the bipartisan Iraq Study Group noted: “The war is in the fourth year and the regular budget process should not be circumvented. Funding requests for the war in Iraq should be presented clearly to Congress and the American people."

Biddle, the CFR senior fellow, suggests the supplemental issue may be the best target for Democrats wary of embracing more far-sighted prescriptions for salvaging Iraq policy given the uncertain situation. “There’s an opportunity politically for the Democrats to criticize the administration once again for their management of the war effort without looking like ‘Defeat-o-crats’,” he says. “Opposing this shoddy funding mechanism is one nice way to do it.” But even there, some say, political danger lurks. John Keller, executive editor of the trade journal Military & Aerospace Electronics, suggests Democrats may shy away in the end to anything that might be perceived as cutting off the troops during wartime.

How does this relate to the debate over the structure and size of the U.S. military?

Whatever happens with regard to supplemental spending proposals, the battle lines over future military priorities grow clearer by the day. The basic doctrinal debate raging since 9/11 pits the high-tech, capital intensive weapons programs of the Air Force and Navy, plus their political allies in Special Operations Forces, against the labor-intensive Army and Marine Corps. Former Defense Secretary Donald Rumsfeld’s vision of “transformation” sat squarely in the former camp.

“The Rumsfeldian ‘Toys R Us’ version of future warfare has in mind future adversaries like China or possibly North Korea, while the Army and Marines see the future in counterinsurgency, irregular warfare, and a larger, much lower tech military willing to get its hands dirty,” says Biddle. During the past six years, realities on the ground in Iraq and Afghanistan caused a major revision—some say, a defeat—of the high tech crowd, epitomized by Rumsfeld’s eventual resignation. But Biddle believes that, whatever the outcome in Iraq, the debate will come back even more fiercely afterward. “One of the major post-Iraq schools of thought is going to be that the ‘Afghan model’ should be the primary vehicle for use of force. SOF [Special Operations Forces] plays a central role in that model, where the ‘never again’ debate dovetails with the high-tech crowd,” says Biddle. “In effect, the glamorous Special Operators become a kind of adjunct of the Air Force. That makes it very hard for the Army. If there’s any headline you could write yearly since 1945 in Washington, it’s ‘Army Loses Budget Battle Again to the Air Force’.”

How might this play out in the 2008 defense budget?

Experts say, new Defense Secretary Robert Gates will likely concentrate on Iraq policy rather than longterm procurement and force structure issues. In the meanwhile, three of the key Democratic committee leaders—Sen. Carl Levin (D-MI), who will head the Senate Armed Services Committee, Rep. Ike Skelton (D-MO), chair of that committee in the House, and John Murtha (D-PA), who will chair the House defense appropriations subcommittee, all say they want to ensure the Army and Marine Corps grow in active duty end strength. McAleese expects to see congressional moves to make permanent the “temporary” increase in the size of the Army from 482,000 to 512,000 authorized after 9/11. “In effect, it would restore an 11^th Army division on a permanent basis, and there are suggestions the Army would then want to grow by an additional 6,000 to 7,000 annually in the active component for the foreseeable future,” says McAleese. “That’s two additional brigade combat teams whose training, equipment, salaries, etcetera, can no longer be sequestered from the baseline defense budget. The Army’s ability to procure modernized weapons under this plan would be in serious question.” Still, the FY 2008 budget, which is being finalized this month, likely will grow again this year, experts say, even if Congress is unsuccessful forcing some of the items in the supplemental request back into the normal budget process.

Are major cuts likely?

Most experts doubt Congress has the political will to cut significantly during wartime, no matter how unpopular the war gets. Many experts believe the Pentagon missed its chance to manage this spending crisis more logically in the recently completed Quadrennial Defense Review, which declined to set priorities that budget planners could use as a guideline. This has created a mismatch between service ambitions and funding (National Interest), writes Gordon Adams of the Wilson Center. “When ‘Anything Goes’ is the budgetary tune, it is not clear the public is getting the modern, transformed, smoothly operated military it seeks and deserves.”

Many programs now appear too far along to cut. In the late 1990s, Air Force leadership defeated efforts to force the service to curtail plans for two separate high-performance aircraft—the F-22 and F-35. Both now are regarded as protected projects since R&D and other commitments are so far advanced. Yet the service has scaled black the pace of purchases, and that debate might continue and be applied to other weapons systems in other services—particularly Navy shipbuilding. More generally, DOD spending on missile defense—a frequent target of Democratic criticism—might also be subject to limitations on its growth pending more clear demonstrations of its abilities. The Government Accountability Office and others have criticized tests of the nascent technology—funded at just under $10 billion annually right now—as unrealistic. As with other expensive multiyear procurement programs, “the issue will be the rate of future annual growth rather than an immediate reduction in funds,” says McAleese.

For the Navy, the challenge could be even greater. The Air Force will be defending programs already under way. The Navy’s main modernization initiatives—a new class of aircraft carrier and a new destroyer class—are still not completely secure. This year, the Navy will put a $3.5 billion down payment on the $10 billion cost of the first of its “next generation” carriers, designated CVN-78.

Pressure on the Navy now is to pare back its annual budget for procuring naval and marine aircraft to help fund carrier construction. On the Navy’s side, however, is the distributed nature of its contracts. Like the Air Force, its ships, submarines, aircraft, and helicopters are built by contractors and subcontractors which employ people all over the United States—in districts held by Democrats as well as Republicans. The Navy may never launch an unsinkable ship, but some of its ship-building programs have come darned close in the past.