Budget Update: Wins for the Department of Defense
Monday night (October 26, 2015), House and Senate budget negotiators agreed on a deal – a budget that will cover FY 2016 (which started October 1 this year) and FY 2017.
Looked at one way, the budget deal has few surprises. Pentagon spending still goes up – from a total of $585 billion in FY2015 to $607 billion in FY2016. Non-military spending also goes up, by about $32 billion. But discretionary spending still isn’t equally split between Pentagon and non-defense programs. The Pentagon’s “half” is $74 billion bigger than the total for the non-military programs.
A large chunk of the Pentagon’s share is OCO – the “Overseas Contingency Operations” fund that was set up for emergency war-related spending, weighing in at $59 billion. That’s more than should be needed as wars continue to wind down (considering that this sum is an addition to the more-than-half-trillion dollar “base” budget the Pentagon already gets.)
But $59 billion is less than what it was last year (FY2015): $64 billion. And it’s less than the House approved in its budget resolution ($92 billion,) and less than was authorized in the (vetoed) National Defense Authorization Act (same number.)
The surprise in the deal is an increase in the small portion of the OCO fund that goes to the State Department -- an increase of $5.8 billion over the amount allocated in FY2015, bringing the total to $14.8 billion. Budget watchers around town have lots of ideas for this money – assistance for Syrian refugees here and in other countries? Nuclear non-proliferation monies to help implement the Iran deal? Support for nuclear weapons clean-up? Or, best of all, investment in preventing further wars and atrocities? At this point, no one seems to know.
The deal includes a temporary extension of the debt ceiling, until March of 2017. It’s a “clean extension” without threatened “policy riders,” amendments that advance a policy agenda that is unrelated to how the U.S. Treasury is financed.
To pay for the “sequester relief,” the deal leans on, among other sources of savings, two health care programs – Medicare and the Affordable Care Act – and on disability benefits. Mandating new ways to reduce “waste, fraud and abuse” in the disability insurance program, the deal counts on a small level of savings to support other programs. (The Pentagon, which has never been audited, was not required to implement any new programs to reduce waste, fraud and abuse.) Sequester cuts that apply to Medicare – limited to 2 percent – are continued two years longer than other parts of the Budget Control Act, and large employers are excused from automatically enrolling their employees in health insurance.
The other news is what didn’t happen. If Congress had allowed the Budget Control Act to take full effect in 2016, as expected, non-defense funding would have been cut by another $37 billion. This deal restores about 90 percent of those cuts for FY2016, and 60 percent in FY 2017, according to Bob Greenstein, founder and President of the Center on Budget and Policy Priorities.
Both houses will vote on this deal this week; it is expected to pass with a minimum of controversy. The president will sign it, and appropriations committees in each chamber will then determine how the budget items will be allocated – especially the “new” money, in State Department, Department of Defense, and some domestic and international programs. Within a couple of weeks, Congress expects to have a two-year budget, all figured out.
Like the government shut-down that didn’t happen a few weeks ago, this budget avoided being the disaster it could have been, leaving open the possibility that we as a nation may yet discover how to build and adopt a budget that fits our actual needs, and leads in the world in a way that makes the heart glad.