Defense Funding Battle Only Beginning

The highly-charged battle over defense funding has started, but is far from over.

House Armed Services Committee Chairman Mac Thornberry has said that President Obama is holding “troop funding hostage to a political agenda” to get more domestic spending for Fiscal Year 2017. The president has said that any additional money for defense must be matched by a similar amount in non-defense funds.

At issue in this particular exchange between Thornberry and the president is President Obama’s decision to keep 8,400 American troops in Afghanistan, rather than the 5,500 that the president’s original FY17 budget envisioned. Thornberry argues that more troops require more funding for Overseas Contingency Operations (OCO), a budget item that pays for war costs. President Obama’s OCO request for FY17 was $41.7 billion in his original submission

If recent history teaches us anything, it is that the defense hawks will get their additional money and the domestic appropriations bill will increase by the same amount.

This conflict stands as a relatively small skirmish compared to the inevitable confrontation over the FY17 continuing resolution (CR) for Appropriations that will engage Congress when it returns after Labor Day. All 12 individual appropriations bills for FY17 will be bundled into another CR. That CR must pass by October 1, or the threat of a government “shutdown” looms.

If past is prologue, Congress will pass a short-term CR into the lame-duck session and then pressure will be on for an Omnibus Appropriations package.

Most analysts believe that Republican leaders will demand at least an additional $18 billion beyond the Obama request for defense. Afghanistan funding disputes will be subsumed into the larger battle over the CR.¹

If recent history teaches us anything, it is that the defense hawks will get their additional money and the domestic appropriations bill will increase by the same amount. Yes, this will breach the “sequester caps” that originated as restraints on spending. However, Congress and the president have agreed to ignore these caps year after year and we expect the same outcome this year.

Almost nothing any candidates for president have said in the ongoing campaign makes one think that fiscal restraint will play anything but a minor role in the race.

The larger question about what seems an inevitability is this: does anyone really care about increasing deficits and debt? Almost nothing any candidates for president have said in the ongoing campaign makes one think that fiscal restraint will play anything but a minor role in the race.

Two four-letter words dominate policymakers in the White House and Congress—jobs and debt. Jobs always wins. We anticipate larger budget requests for both domestic and defense spending no matter who wins the White House in November.

---

¹ This is the exact language from the 2017 House National Defense Authorization Act (NDAA) (emphasis added): “Consistent with that agreement (BBA2015), the NDAA maintains adherence to the House Budget Committee approved budget resolution of $574 billion for National Defense base requirements by authorizing $543.4 billion in base funding for requirements within the Committee’s jurisdiction. Additionally, the legislation provides $23.1 billion in Overseas Contingency Operations (OCO) accounts for 2 base requirements, which is $18 billion more than was provided in the President’s Budget Request, in order to begin to restore readiness in the force. The bill further provides OCO funding of nearly $35.7 billion, which will cover contingency operations until April 2017. The Chairman’s expectation is that a new President will assess the national security landscape and submit a supplemental budget request – as is traditional in the first year of a new administration. The total funding authorized for defense in the House bill is the same as the level proposed by President Obama’s budget.”