The Winners and Losers of Next Year’s Defense Budget

What was cut and what was spared in Defense Secretary Chuck Hagel’s budget-request preview.

Soldiers with the United States Army's 3rd Battalion, 41st Infantry Regiment are seen on a joint patrol with the Afghan National Army prepare for a joint patrol with near Command Outpost Siah Choy on March 28, 2013 in Kandahar Province, Zhari District, Afghanistan.
National Journal
Add to Briefcase
Jordain Carney and Sara Sorcher
Feb. 24, 2014, 12:41 p.m.

The blade hasn’t fallen yet, but De­fense Sec­ret­ary Chuck Hagel raised the ax Monday when he offered a sneak peek of the Pentagon’s planned budget for next year.

The Pentagon is ask­ing Con­gress for $496 bil­lion, $45 bil­lion less than it ori­gin­ally ex­pec­ted. Tucked in­side that budget trim­ming are a host of win­ners — pro­grams and pri­or­it­ies that the de­part­ment kept safe from cuts — and losers who will not be spared.

Noth­ing in Hagel’s plan, however, is def­in­ite. Con­gress still con­trols the purse strings, and the Pentagon’s fisc­al 2015 re­quest will un­doubtedly be changed as mem­bers and de­fense lob­by­ists use their pull to pro­tect their pri­or­it­ies — and try to shovel the spend­ing pain to someone else.

But it could be harder to get off the chop­ping block than to stay off of it. Here’s what got a head start Monday and what got left be­hind.


Spe­cial-op­er­a­tions forces: The mil­it­ary’s elite spe­cial-op­er­a­tions forces, which bur­geoned after the Sept. 11, 2001, at­tacks and were at the fore­front of the U.S. fight against al-Qaida, will in­crease from their cur­rent level of 66,000 ser­vice mem­bers to 69,700. This is one key ex­ample of how the mil­it­ary, even in more aus­tere times, is try­ing to pro­tect, as Hagel put it, “cap­ab­il­it­ies uniquely suited to the most likely mis­sions of the fu­ture.”

Mil­it­ary re­tire­ment funds: While the Pentagon is of­fer­ing some mod­est re­forms to mil­it­ary be­ne­fits, over­all, Pentagon of­fi­cials have sworn off mak­ing changes to the mil­it­ary re­tire­ment sys­tem in next year’s budget — even though they want to curb its rap­id growth that threatens to usurp oth­er key pri­or­it­ies in a downs­ized de­fense budget.

After the quick — and bi­par­tis­an — back­lash in Con­gress to a pro­vi­sion in Decem­ber’s budget agree­ment that cut ap­prox­im­ately $6 bil­lion in mil­it­ary pen­sions, Pentagon of­fi­cials made it clear they would wait to pro­pose ma­jor changes un­til a com­mis­sion makes its re­com­mend­a­tions in Feb­ru­ary.

Bases: Hagel is call­ing for an­oth­er round of base clos­ures that could take place in 2017. The Pentagon des­per­ately wants to get rid of its ex­cess mil­it­ary bases and fa­cil­it­ies. However, es­pe­cially in an elec­tion year, the bases may es­cape un­scathed — and Hagel knows it. “I am mind­ful that Con­gress has not agreed to our BRAC re­quests of the last two years,” he said.

Navy cruis­er fleet: Half of the Navy’s cruis­er fleet is go­ing to be “laid up” — put in the shipyard — to be up­graded. This in some ways is a work-around, be­cause the Navy has pre­vi­ously tried to de­com­mis­sion some cruis­ers in­stead of provid­ing ex­pens­ive over­hauls, but Con­gress re­fused. The Pentagon’s pro­pos­al is a more cre­at­ive way to save some money short-term, be­cause the ships will not be op­er­at­ing — but these 11 cruis­ers will “even­tu­ally” be re­turned “to ser­vice with great­er cap­ab­il­ity and a longer life span.”

Cy­ber­se­cur­ity: Cy­ber spend­ing — from cy­ber­se­cur­ity to in­tel­li­gence gath­er­ing and re­con­nais­sance — will get a boost. Hagel said last week that the Pentagon is “ad­just­ing our as­set base and our new tech­no­logy.”


The whole budget: The Pentagon is re­quest­ing $496 bil­lion to meet the budget caps Con­gress has man­dated. Des­pite the Pentagon’s hopes that steep budget cuts would dis­ap­pear, the budget agree­ment passed in Decem­ber only gave the de­part­ment a rather measly $9 bil­lion in se­quester re­lief for next year.

Still, in the hopes of fund­ing some crit­ic­al pri­or­it­ies, the Pentagon will sub­mit an “Op­por­tun­ity, Growth and Se­cur­ity Ini­ti­at­ive.” This “wish list,” as it’s already been dubbed, will out­line how it would spend $26 bil­lion on top of the Pentagon’s budget re­quest.

This sets up a polit­ic­al free-for-all on Cap­it­ol Hill as mem­bers try to cherry-pick their pri­or­it­ies. And Hagel said it would be “paid for with a bal­anced pack­age of spend­ing and tax re­forms” pro­posed in the rest of the pres­id­ent’s budget. We’ll see how that goes over.

The Army: Hagel’s budget calls for the Army to shrink dra­mat­ic­ally, to its low­est force size since be­fore World War II. The num­ber of act­ive-duty per­son­nel will drop from 520,000 to as low as 440,000 — a num­ber roughly con­sist­ent with what Army Chief of Staff Ray­mond Odi­erno has said is needed for the Army to ad­equately re­spond to threats around the world. Still, even as the U.S. ends an era dom­in­ated by long wars in Ir­aq and Afgh­anistan, the Army was pre­par­ing only to downs­ize, from a war­time peak of 570,000, to 490,000.

This big loser in the Pentagon’s budget re­quest could suf­fer even more if the budget cuts re­main in place. “If se­quest­ra­tion-level cuts are re-im­posed in 2016, the act­ive-duty Army would have to draw down to an end strength of 420,000 sol­diers,” Hagel said.

The act­ive-duty forces aren’t the only di­vi­sion be­ing rolled back in the budget re­quest. The Army Na­tion­al Guard would draw down to 335,000 sol­diers by 2017 from its cur­rent level of 355,000, and the Army Re­serves would drop to 195,000 from 205,000.

European bases: The Pentagon is well aware that clos­ing mil­it­ary bases of­ten leads to a los­ing fight with Con­gress. So it will pur­sue one loop­hole: clos­ing European bases, which it can do without con­gres­sion­al ap­prov­al.

The de­part­ment, Hagel said, will re­view — and pur­sue — re­com­mend­a­tions to close bases in Europe. The de­part­ment has cut its in­fra­struc­ture in Europe by 30 per­cent since 2000, he ad­ded.

Mil­it­ary com­pens­a­tion: The Pentagon is re­com­mend­ing a ba­sic 1 per­cent pay raise for mil­it­ary per­son­nel. The mil­it­ary’s top brass will see their pay frozen for one year — pre­sum­ably in solid­ar­ity with more-ju­ni­or ser­vice mem­bers. Fu­ture pay in­creases, Hagel said, will be “re­strained, though raises will con­tin­ue.”

Con­sid­er­ing that the Pentagon des­per­ately wants to curb the rap­id growth of mil­it­ary com­pens­a­tion and be­ne­fits, you could view the re­l­at­ively mod­est re­com­men­ded re­duc­tions in this area as a “win­ner.” But the back­lash from vet­er­ans groups — and many in Con­gress — will be quick and fierce. “Al­though these re­com­mend­a­tions do not cut any­one’s pay, I real­ize they will be con­tro­ver­sial,” Hagel ac­know­ledged. This is why Hagel has been meet­ing in per­son with these vet­er­ans groups. “I wanted to as­sure them that I want their in­put “¦ but we’re go­ing to pro­ceed.”

Hous­ing al­low­ances: These re­l­at­ively mod­est changes, in an era of budget pres­sure, could be con­sidered “win­ners.” But for the in­terest groups — and those in the mil­it­ary who love this be­ne­fit — there will be some key changes as the Pentagon scales back the growth of its tax-free hous­ing al­low­ances. Cur­rently, the mil­it­ary cov­ers 100 per­cent of ser­vice mem­bers’ hous­ing ex­penses, and will scale it back to cov­er­ing on av­er­age only 95 per­cent — with the re­main­ing 5 per­cent paid out of pock­et. However, it’s im­port­ant to re­mem­ber, as Hagel said, that mil­it­ary mem­bers, on av­er­age, in the 1990s paid for 18 per­cent of their hous­ing ex­penses.

Mil­it­ary gro­cery stores: The Pentagon is re­com­mend­ing slash­ing the dir­ect sub­sidies provided to mil­it­ary com­mis­sar­ies, which provide gro­cer­ies to mil­it­ary mem­bers, their fam­il­ies, and vet­er­ans at a dis­coun­ted price. The $1.4 bil­lion sub­sidy will be gradu­ally re­duced to $1 bil­lion in the re­quest — but the com­mis­sar­ies will still get free rent. The pri­or­it­ies will be to pre­serve com­mis­sar­ies more re­motely loc­ated. Des­pite the cuts, Hagel said, “they will be able to con­tin­ue to provide a very good deal to ser­vice mem­bers and re­tir­ees.”

Navy LCS ships: The Pentagon is dir­ect­ing the Navy to cut 20 of the lit­tor­al com­bat ships it was plan­ning to buy, from 52 to 32 ships. Hagel is “con­cerned that the Navy is re­ly­ing too heav­ily on the LCS to achieve its long-term goals for ship num­bers.”

In­stead, Hagel is press­ing the mil­it­ary to “dir­ect ship­build­ing re­sources to­ward plat­forms that can op­er­ate in every re­gion,” and fig­ure out wheth­er the LCS is the right ship to per­form in the Asia Pa­cific re­gion — where the ad­min­is­tra­tion is try­ing to re­bal­ance its dip­lo­mat­ic and mil­it­ary fo­cus.

Air Force’s A-10 fleet: Hagel wants to cut the Air Force’s A-10 fleet to save $3.5 bil­lion over five years. The A-10s, prized for their close air-sup­port cap­ab­il­it­ies, would have been re­placed by the F-35 some­time in the early 2020s, Hagel noted, and this pro­pos­al simply speeds up that out­come. Though Hagel called the A-10 “a 40-year-old single-pur­pose air­plane ori­gin­ally de­signed to kill en­emy tanks on a Cold War bat­tle­field,” don’t ex­pect it to go down without a fight in Con­gress. Re­pub­lic­an Sen. Kelly Ayotte of New Hamp­shire, whose hus­band was an A-10 pi­lot, is lead­ing the charge.

Army’s Ground Com­bat Vehicle: Hagel has ac­cep­ted the Army’s re­com­mend­a­tion to ter­min­ate the pro­gram — and has asked the Army and Mar­ine Corps lead­er­ship to “de­liv­er new, real­ist­ic vis­ions for vehicle mod­ern­iz­a­tion by the end of this year.” While the de­cision was not ex­actly a sur­prise, it’s worth not­ing the Army once said the GCV was crit­ic­al, and it will in­stead buy a cheap­er vehicle, likely an up­grade of the Brad­ley Fight­ing Vehicle.


Welcome to National Journal!

You are currently accessing National Journal from IP access. Please login to access this feature. If you have any questions, please contact your Dedicated Advisor.