It’s Time for a Grand Budget Bargain to Save the Pentagon


When the continuing resolution currently funding the government runs out at midnight on Dec. 22, the Pentagon will have spent 1,096 days under continuing resolutions since 2011— more than three full years. Secretary of the Navy Richard Spencer said the Navy alone has “put $4 billion in a trash can, poured lighter fluid on it, and burned it,” since 2011 due to the routine use of continuing resolutions instead of real full-year spending bills — and this eye-popping figure is likely an underestimate. Legislative gridlock has left the Pentagon struggling under the latest of repeated short-term continuing resolutions, stuck planning and executing programs in inefficient short-term chunks.

This has to stop. If the Pentagon is shackled to the cap levels, forget about Trump’s campaign-trail promises of a 540,000-strong Army, 350-ship Navy, or replacing the Air Force’s aging fleet of combat aircraft. With the rise of China, a revisionist Russia, a nuclear standoff with North Korea, and continued turmoil in the Middle East, it’s past time to throw out the caps that lock in Pentagon spending. And, for the first time in years, a solution is politically possible.

The trifecta of the expiration of the continuing resolution, the must-pass legislation on Congress’ plate, and the approaching Christmas holidays, when legislators are most eager to cut deals to get home, creates a unique opportunity. Because any buget deal will require that most time-tested of legislative strategies — buy-offs — legislators should make a grand bargain instead of settling for another mini-budget deal of $15-20 billion. The current set of deadlocks — combined with a broad appetite for more defense spending — offers the best opportunity in years to finally get rid of the sequester caps for good.

The Pentagon has been forced to work under longer and longer continuing resolutions as Democrats and Republicans use the defense budget caps, put into place by the Budget Control Act of 2011, as leverage. Even worse, the Pentagon faces a hard spending limit of $549 billion in regular defense spending in FY 2018, due tothese limits. This is $54 billion below the FY 2018 defense budget request, and $85 billion below the $634 billion endorsed by overwhelming margins in the Senate and House just a few weeks ago. A defense budget of $549 billion would mean not funding the readiness recovery efforts to bring our ships and planes back into good working order, cutting training hours for America’s sailors, airmen, soldiers, and marines, and forgoing essential research and development to maintain the military’s technological advantage against adversaries.

It’s past time to stop settling for two-year mini-deals to raise the defense and non-defense spending caps, and strike a grand bargain. Both parties agree that defense spending needs to be increased in response to eroding U.S. military advantage in a contested world. Negotiators should use the time pressure of the Dec. 22 deadline to avert a government shutdown to strike a deal for increasing the defense caps to at least the $634 billion for FY 2018 and FY 2019, and ending the caps entirely for FY 2020 and FY 2021. This deal should be attached to a short-term continuing resolution to give appropriators the there to four weeks they need actually craft a full-year spending bill. Agreeing to a grand bargain on defense spending now would let the Pentagon plan a FY 2019 budget request that will actually reflect the challenges to be identified in the forthcoming National Defense Strategy. Just as important, a real agreement would set up a smooth appropriations process for FY 2019, saving the Pentagon from annual hobbles of a continuing resolution. But a grand bargain on spending isn’t just necessary for U.S. national security — it’s politically achievable.

The easiest “solution” would be to extend the continuing resolution again, kicking a budget deal down the road until late December or January, an approach favored by the House Freedom Caucus. But defense hawks, worried that Congress is sliding towards an even longer continuing resolution that would lock the Pentagon into last year’s funding levels and kneecap its ability to adjust to the current security environment, won’t support more short-term spending patches. But both Rep. Mac Thornberry, chair of the House Armed Services Committee, and Sen. John McCain, chair of the Senate Armed Services Committee, publicly promised to vote against another punt, instead calling for a budget deal to increase defense spending. Sticking to his guns, McCain and seven of his committee colleagues voted against this latest continuing resolution, a sign that defense hawks’ patience is up.

In September, the Senate almost passed an amendment eliminating the sequester but couldn’t reach agreement on non-defense spending. A deal to increase defense spending caps by $54 billion and non-defense spending caps by $37 billion annually in FY 2018 and FY 2019 was reportedly close to being finalized in November, before negotiations broke down over how much to raise non-defense spending limits. The same basic contours of a defense deal were alive in negotiations between President Donald Trump and Republican and Democratic congressional leaders last week. Defense hawks are on the record stating that they will support, or at least tolerate, commensurate increases in other government spending if that’s what it takes to fully fund the Pentagon. Democrats are far more supportive of big defense spending increases than they were just a few years ago. And the passage of the tax bill gives House Freedom Caucus members one of their wish-list items and weakens their argument against more government spending.

As part of this deal, the caps for FY 2020 and FY 2021 should be permanently eliminated. The Budget Control Act caps have largely failed in their raison d’etre to reduce government spending by $1.2 trillion. House conservatives should stop beating the dead horse of deficit reduction and give the Pentagon the resources it needs, but any bill that has Democratic support would pass even if the whole House Freedom Caucus votes no.

Here’s how this deal would come together. Any budget deal would require at least 8 Senate Democrats to support it, giving Democrats leverage in the negotiations. But the exception of the House Freedom Caucus, the parties are actually that not that far apart on many of the Democrats’ priorities. To satisfy Democrats’ demands for parity between defense and non-defense spending, Republican leadership could pair the requested $66 billion in overseas contingency operations funding — which isn’t subject to the caps — with emergency non-defense funding for the opioid crisis and hurricane and wildfire relief, something the majority of the House supports. The bill amending the budget caps should also fund the Children’s Health Insurance Program (a bipartisan priority), stabilize the individual insurance marketplace (per Sen. Susan Collins’ “ironclad,”deal with Sen. Mitch McConnell), and extend government funding until Jan. 30, to allow time for the appropriators to hammer out the actual spending bills at the new cap levels.

Senate Minority Leader Chuck Schumer and House Minority Leader Nancy Pelosi had vowed to block any more continuing resolutions without a DACA fix. But progress on a DACA fix and the prospect of a bipartisan DACA/border security bill in January means Democrats can play ball on fixing the defense spending caps and extending government funding after Dec. 22 and avoid splitting their caucus, removing this volatile element from the shutdown fight.

The House plans to vote on a bill that would fund defense at the previously House-passed levels through the end of the 2018 fiscal year, extend the continuing resolution for non-defense spending through Jan. 19 and then skip town, trying to force the Senate to pass it or risk a shutdown. But many House Republicans are skeptical that this approach will succeed. Rep. Charlie Dent complained that his colleagues have a bad case of “Senate denial,” and Rep. Tom Cole said he was “not convinced” that “Democrats will roll over on this.” With Schumer promising that Senate Democrats “will oppose it”, this latest maneuver is on the same go-nowhere track as the summer full-year defense appropriations bill it revisits. Republican Sen. John Boozman stated plainly that House members are “just going to have to get on a plane and come back” if they leave town having passed a bill that won’t fly in the Senate. Legislators’ desire to head home for the holidays should be an added incentive to cut a budget deal and avoid a shutdown.

Striking a grand bargain to increase the defense budget caps and end the sequester can work because everyone gets something. Democrats could compromise on defense/non-defense parity and keep the government open in exchange for policy concessions like protecting kids on Children’s Health Insurance Program, somewhat stabilizing the individual marketplace for health insurance, and real progress on a bipartisan DACA fix in January. The conservative House Freedom Caucus and its allies will rail against any increases to the caps for non-defense spending, and demand that there be no deals that fix DACA or the individual insurance market. But these demands are unrealistic in the current political landscape — Democrats in the Senate hold all the cards for any budget deal, and those policies are broadly popular. House Freedom Caucus members are almost uniformly in very safe seats in the 2018 midterms and will have the passage of the tax legislation as a gold-plated legislative accomplishment. Moderate Republicans in districts that narrowly went to President Donald Trump, or where Hillary Clinton won a majority, are looking increasingly vulnerable in a potential 2018 blue wave — benefit from the modest concessions to Democrats, all of which have bipartisan public support, without having to go to the mat for them. The Republican caucus as a whole avoids a shutdown that it assuredly would be blamed for. And, of course, defense hawks get a far bigger increase for defense spending — much more than the $19 billion that past budget deals have averaged — and a sequester that is gone for good after FY 2019.

Ironically, the current legislative deadlock and highly motivating end-of-year deadline gives Congress another opportunity. U.S. national security is too important to let another chance to kill the sequester slip away.


Katherine Blakeley is a Research Fellow at the Center for Strategic and Budgetary Assessments, where she directs the budget and resources program.   She received her B.A. from Vassar College and her M.A. and Ph.D. in Political Science from the University of California, Santa Cruz. 

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