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Hagel, Dempsey Beg Appropriators For Sequestration Wiggle Room

Posted by Sydney J. Freedberg Jr. on

Defense Secretary Chuck Hagel looking concerned scr_130417-M-EV637-190c

CAPITOL HILL: Even amidst the furor over sexual assault and NSA leaker Edward Snowden, the budget cuts known as the sequester dominated this morning’s discussion before the Senate Appropriations Committee.

Testifying before SAC’s subcommittee on defense, Defense Secretary Chuck Hagel and Joint Chiefs chairman Gen. Martin Dempsey both pleaded for, in Hagel’s words, “time and flexibility.” The 2011 Budget Control Act spreads $500 billion in defense cuts evenly across a decade, requiring the same $50 billion bite from the Pentagon every year. Since both executive and legislative branch leaders seem to have largely, if not entirely, given up on reducing the size of the sequester cuts, administration officials are increasingly focusing their efforts on their timing and legal flexibility.

Army Chief of Staff Gen. Ray Odierno has been out in front of his peers in begging Congress to “backload” sequestration, asking them to revise the statute so the cuts are below $50 billion in the early years and above $50 billion in the latter part of the decade. That would give the same 10-year total but allow the military more time to plan and to realize some efficiencies that take longer to implement, especially closing bases and reducing expenses on military personnel – neither of which is at all popular with Congress. Today Hagel and Dempsey (an Army man himself) echoed Odierno’s appeal.

“We need the certainty of a predictable funding scheme [and] we need time to implement trade-offs,” said Gen. Dempsey. “We need the full flexibility to keep the force in balance.”

Congress did give the military a modest amount of relief this year, buying down the sequester bill from $50 billion to $37 billion, but with much of the money for 2013 already obligated, the Pentagon had to take the lion’s share of the cuts from operations, maintenance, and, most damaging, training by cancelling activities in the latter half of the fiscal year. Between sequestration and higher costs for the Afghan war than Pentagon budgeteers had estimated, Hagel said, the operations and maintenance account is $30 billion short.

The Army has had to cancel full-size brigade exercises and rely on only small-unit training for 78 percent of the force. To use an NBA metaphor, Gen. Dempsey said, “[we’re] training individual players on a basketball team but not giving them an opportunity to scrimmage before we…put them in the game.”

When it comes to the effects of under-training units not currently deployed, Hagel said, “you don’t see it now, you don’t need it now, but we will need it.”

Rather than cut training and keep aircraft carriers in home port (as has been done), the Pentagon would prefer to tackle its long-term overhead problems, particularly the rising cost of military personnel.  But so far Congress has repeatedly rejected efforts to, for example, raise the fees and copays military personnel owe for the Defense Department’s TRICARE health plan.

“There are expectations in the active and retired forces, based on great sacrifice and service, that they would receive these benefits,” said Sen. Jack Reed, urging the Pentagon to consult with advocates for servicemembers. “What is compelling you to take these steps?”

“Your people are your most important assets, you take care of your people, and we’ve made commitments to our people,” Hagel emphasized. But if the cost of benefits continues to grow as rapidly as it has since the late 1990s, he said, the military will have to cut the number of soldiers, sailors, airmen and Marines, leaving the country with “a much smaller force.”

The administration budget requests only “modest increases in the enrollment fees” and only for retired servicemembers under age 65, not those still on active duty, Hagel said. “Even if we got those [increases], that benefit package – and rightly so – would probably still be the best benefit package that I’m aware of anywhere.”

When the current system was set up in 1996, noted Pentagon Comptroller Robert Hale from his seat at Hagel’s side, retirees were paying 27 percent of the total cost of their healthcare. Now they only pay 11 percent, because Congress has repeatedly rejected increases of any kind, let alone increases that track inflation and the rising cost of medical services. “We will not move back to 27,” Hale said, but the percentage has to be higher than 11.

Some estimates suggest that healthcare spending will soon consume one fifth — 20 percent — of the Defense Department budget, noted a sympathetic Sen. Lindsey Graham: “We’re not going to fight our enemies with a good healthcare plan.”

Big reforms take a long time to implement, however, As a stopgap for 2013, suggested Sen. Susan Collins, why doesn’t the Defense Department request a supplemental spending bill to cover the shortfalls in war funding? That’s a separate problem from the sequester, she noted, although the two compounded each other.

The Pentagon has relied on such supplemental Overseas Contingency Operations (OCO) funds to pay much of the cost of the Afghan and Iraqi wars, and such money is partially protected from sequester. (If Congress adds $1 to the base budget, the sequestration law simply adds $1 to the amount being cut; add $1 to OCO, however, and the military gets to keep it). The current OCO request for 2014 is about $80 billion, depending on how you count it.

The Defense Secretary’s staff has not considered asking for a further supplemental for 2013, Hagel replied: “One supplemental to address this issue is not going to fix this problem. The only thing that’s going to fix this problem is a change in the sequestration.”

So far, sadly, all signs point to gridlock.

What do you think?