December 2, 2015

DOD comptroller: Budget deal offers relief, uncertainty

Cheryl Pellerin
DOD News

Defense Department funding from the recent two-year budget deal was hard to achieve and sets the department up fairly well for the near future, the Defense Department Comptroller said here this week, adding that uncertainty remains in the long term.
Mike McCord, speaking at the Center for Strategic and International Studies, said the increase provided by the Bipartisan Budget Act of 2015, or BBA15, gave the department 98 percent of what it asked for in fiscal year 2016 — not counting $8 billion in relief for overseas contingency operations, or OCO.
“For 2017 it’s a little less, about 96 percent without the OCO relief, maybe 97 percent with it,” McCord said.

Budget Control Act
The president’s budget request for DOD in fiscal 2016 was $534 billion, and under BBA15 the base budget is $522 billion plus $8 billion in OCO funding that can be used as OCO funds or as part of the base budget.
Under the sequester caps set by the Budget Control Act of 2011, the fiscal 2016 base budget would have been $498 billion.
The president’s budget plan for DOD in fiscal 2017 was $547 billion, and under BBA15 the base budget is $525 billion plus $8 billion in flexible OCO funding.
Under the sequester caps set by the Budget Control Act of 2011, the fiscal 2017 base budget would have been $512 billion.
“If there is no further relief from the BCA after this two-year budget deal and we return to sequester-level caps in 2018, we would still absorb about $800 billion of cuts over 10 years from the BCA, even with this deal and the previous Murray-Ryan deal for 2014 AND 2015,” McCord said.

Driving the budget
“That’s the best case at this point, and the worst case is probably $900 billion, based on the BCA being what it is. That shows you that the range is much closer to being driven by the BCA, which is surprising when you think about some of the changes in world events,” the comptroller added.
On the $8 billion in each fiscal year for OCO relief, McCord says he has a different view of the total amount of relief.
“To me the OCO relief is not really $8 billion because the president decided shortly before this deal was agreed to, to extend the higher troop level in Afghanistan,” he said.
The bill for the extra troops — which McCord estimates is about $3 billion or more a year — was not contained in the fiscal 2016 plans.
He added, “That’s how I count it … [but] $5 billion [a year] worth of relief is still a good thing.”

Uncertainties remain
Despite the positive thrust of the two-year BBA15, McCord says many uncertainties remain now and will remain in the future.
In the near term, he said, the department faces a wide range of military challenges, including the following:
— Balancing capability, capacity and readiness;
— Terrorism, instability across the Middle East and North Africa;
— Rising pressure from Russia and China;
— Globalization of advanced technology;
— Rebalancing to the Asia-Pacific region;
— Cyber defense, attribution and response; and
— Short-term budget deals, constrained resources and fiscal uncertainty.

Into the future
Priorities and uncertainties for fiscal 2017 and beyond include, among others, McCord said, nation-states like Russia, China, Iran and North Korea; ISIL and the global counterterrorism challenge; balancing capability, capacity and readiness; compensation and retention for today’s force; the Force of the Future; innovation in investments and practices; operating in space and cyberspace; and modernizing the nuclear deterrent in the 2020s and 2030s.
“I wish that I could say I had long-term budget stability or predictability to underwrite the investment we want to make as a department. I do not have that,” he said.

What BBA15 doesn’t do
In his description of what the BBA15 does and doesn’t do, McCord said one of the things it doesn’t do is most important to the department — it does not extend BCA spending caps beyond 2021.
“This was something that was very important to us, probably our top priority when we talked to [the Office of Management and Budget] as they headed into the negotiations,” he said.
“We did not want to see these caps extended even further because … the decade of the ’20s is when we’ll probably need additional resources, even above where we are today, to start recapitalizing the nuclear triad,” McCord added.

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