DoD: No more sequestration, yes to pension reform and BRAC in budget request

The White House defense budget request is $38 billion over the limits set by sequestration. In an attempt to balance the increased funding, the Pentagon is purs...

By Sean McCalley
Federal News Radio

The Obama Administration has proposed a defense spending plan for fiscal year 2016 that goes beyond the limits of sequestration.

With a base budget request of $534 billion, the White House hopes to take the Defense Department $38 billion beyond the sequestration caps set for next year. Combined with $51 billion for Overseas Contingency Operations, the grand total would stand at $585 billion.

Added up, it’s a 4 percent overall increase from FY 2015. Long-term projections, assuming Congress would allow the Pentagon to run without sequestration caps in FY 2016 and beyond, would place total defense spending at $150 billion over the sequestration limit, set to end in 2023.

Most of that increase goes to the base budget, as the Pentagon wants to cut 21 percent from this year’s OCO funds. It “[reflects] the end of the combat mission and the continued drawdown of forces in Afghanistan,” wrote the Pentagon in its budgetary breakdown.

The financial logic behind the request focuses not only on restoring the budget to normal levels, but also erases the damage DoD says it is seeing as the result of ongoing fiscal austerity.

“We have been surviving, not thriving for the past three years,” Deputy Secretary of Defense Bob Work said during a press conference today. “We haven’t been able to get to [critical] modernization issues that have been facing us.”

DoD said the plan supports the goals outlined in the 2014 Quadrennial Defense Review, and sets aside funding for further military action against the Islamic State in Iraq and Syria. Based on the QDR, the current request is the minimum amount the military needs to meet its specific needs for the future.

It proposes a boost in cybersecurity funding, to bring the total spending up to $5.5 billion.

Personnel reductions

The plan also calls for a series of business reforms, including base infrastructure changes, uniform and civilian workforce reductions, and Defense Secretary Chuck Hagel’s plan for a 20 percent reduction to headquarters staff.

DoD expects those reforms will balance some of its spending increases, which it claims will get rid of “excess force structure in order to focus resources on high priority capability areas.”

On the personnel side, the Pentagon would like to slightly shrink its total military force size by 11,300 people. That’s consistent with the year-to-year reduction plans for all the branches, and would bring the total active-duty troop level down to 1.3 million people.

The civilian workforce would also shrink. The White House plan would get rid of 3,500 people.

Federal employee unions, while half-heartedly applauding the President’s call for a 1.3 percent pay raise for the entire government, said cutting the workforce will ultimately make life harder for DoD’s financial planners.

“Defense workers are essential to maintaining our military strength, and cutting the workforce will impact our country’s ability to maintain its military readiness,” said National Federation of Federal Employees President Bill Dougan. “Cutting the defense workforce is a bad idea.”

On top of the cuts to the civilian and military workforce, the Pentagon wants to stick with its plan to eliminate 20 percent of its headquarters staff by FY 2019. Under the plan, DoD expects to save about $1 billion, but so far the details of exactly who to cut have yet to materialize.

From the federal union perspective, the efficiency gained and money saved from headquarter’s reductions are erased by the lost expertise from the overall civilian workforce in the department. The American Federation of Government Employees predicts DoD will simply have to replace lost civilian employees with more expensive contracting employees.

“No proposal to cut the cost of the department’s headquarters operations can be taken seriously if it disregards the one segment of the workforce that costs the most,” warned AFGE president J. David Cox.

Pension changes, housing allowance reductions, and BRAC

Despite stiff opposition from Congress in recent years, Under Secretary of Defense (Comptroller) Mike McCord remains optimistic that another round of base realignments and closures could happen down the road.

“In my previous life, I worked on Capitol Hill for many years,” said McCord. “And I spent five years working with Senator [John] McCain’s staff to get authority for what turned into the BRAC round… It doesn’t necessarily happen overnight, and in this case it certainly has not, but I think the case is still compelling.”

But specific estimates on savings from another round of BRAC are elusive, admitted McCord.

Alongside another call for BRAC, the DoD budget outlines a pension reform plan that echoes last year’s White House budget plan. It’s independent from the findings of the Military Compensation and Retirement Modernization Commission, and would add new annual fees to TRICARE-for-Life coverage for retirees age 65 or older.

It would also consolidate TRICARE options and calculate new deductibles and co-pay procedures. Pharmacy expenses would also change, to encourage TRICARE members to rely more on mail-order and generic drugs.

Housing allowances would also shrink under the plan. DoD wants to increase out-of-pocket expenses for its employees to 4 percent, instead of the 1 percent rate Congress passed last year.

Working in conjunction with increased commissary costs, the Pentagon hopes to balance its sequestration-proof budget strategy with those targeted personnel costs, which “account for half of the department’s budget,” according to the Pentagon.

For analysis on the Defense budget, Federal News Radio turned to two experts. Listen below to their interviews as heard on our Federal Drive and In Depth radio shows.


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