Looking Towards 2017: National Security in Focus

GAI | December 1, 2016

With the election over and cabinet hopefuls parading to Trump Tower, political prognosticators are looking towards 2017.  What will the incoming presidential administration and unified Republican government mean for policy and politics?  The congressional experts at GAI are weighing in with a series of deeper dives on different subject areas.  Below are the contributions for national security: commentary on defense spending by Director Ken Gold, and on intelligence oversight by Fellow Katina Slavkova.

The Outlook for Defense Spending

A number of challenges are on the horizon for military spending.  These include reconciling the campaign promises of the President-elect, current challenges in funding ongoing defense plans, sequestration’s budget caps in theory and practice, and the Republican Conference’s views on defense spending—each of which contain internal contradictions.  Budgetary policy has increasingly embodied the Bismark-ian sausage-making process, and defense spending is no different.

During the presidential campaign Republican candidate Donald Trump repeatedly called for a major defense buildup, while at the same time reducing the deficit (and cutting taxes.)  Among his initiatives he pledged to increase the end strength of the Army as well as the number of ships in the Navy, and pay for the increased spending by cutting Pentagon waste, fraud and abuse.  Outside analysts have estimated the price tag for his defense increases at $55 billion to $80 billion a year over current planned spending.

Even absent the President-elect’s proposed increases, defense spending is already facing major challenges in funding current defense plans. Current Pentagon plans, which include a smaller Army and fewer ships, are already facing a “procurement gap” of major proportions, and are facing an enormous “bow wave” in procurement spending in the next decade as these systems reach their peak funding requirements.

These include major legacy weapons systems – aircraft carriers, F-35 fighter planes, and refueling tankers; modernization of all three legs of the nuclear triad – ballistic missile subs, a long-range bomber, and new ICBMs; as well as modernization of other conventional weapons systems. The Congressional Budget Office estimates the procurement gap under current defense plans to be as much as $20 billion to $30 billion per year.

Both defense and nondefense discretionary spending is currently limited by caps set in place by the Budget Control Act (BCA) of 2011 (P.L. 112-25), which was signed into law by President Obama in 2011. Initially, the caps were set to remain in place through FY 2021. The BCA limits discretionary spending through hard caps as well as automatic spending reductions known as the sequester, and was projected to reduce the cumulative deficit over ten years by roughly $2 trillion. Since its passage, the BCA has been amended to raise the budget caps three times, most recently by the Bipartisan Budget Act (BBA) of 2015 (P.L. 114-74), which increased the caps for FY16 and FY17.

The fact that the BCA was intended to govern discretionary spending for ten years has not in any way eliminated ongoing spending debate in Congress, as illustrated by the fact that Congress has voted to raise the caps three times in the first five years of the law. Defense hawks, who are mostly Republican, want to raise the defense caps but not the non-defense caps. Most Democrats, including President Obama, haven’t opposed raising the defense caps, but have sought equal raises for nondefense caps.

Deficit hawks, who are mostly Republican, and who represent the overwhelming majority of the House Freedom Caucus, want to maintain the original caps and the sequester from the 2011 BCA, or even reduce them below those levels. Deficit hawks as well as many defense hawks also seek to make cuts in mandatory spending, typically in Medicaid, Medicare, and even Social Security, roughly in that order.

Emergency war spending, called Overseas Contingency Operations (OCO), is not subject to the BCA, nor the increased caps under the 2015 Bipartisan Budget Act. The debate over using OCO funding to increase defense spending without raising the defense caps has also been a major source of contention, and has thus far derailed this year’s passage of the National Defense Authorization Act (NDAA). If Congress fails to pass NDAA in the lame duck session this month, it will be the first time in 54 years that an NDAA hasn’t been signed into law.

Differences over discretionary spending again dominated debate in the 114th Congress, and were a significant factor in Speaker Boehner’s resignation just a year ago; and in the Republican Congress’s failure to pass a budget resolution as well as the failure to pass 11 of the 12 appropriations bills this year, despite having clear majorities in both chambers.

While it appears that Congress will pass another continuing resolution (CR) that extends funding through April or May, differences over discretionary spending, especially over the level of defense spending, will almost certainly reemerge in the spring. We don’t yet know what the incoming president’s budget proposal will look like; nor do we know what the FY18 congressional budget resolution will look like.  Additionally, on Monday, House Budget Chair Tom Price was named as the nominee for HHS Secretary, so assuming he’s confirmed, there will be a new chair.

A year ago these fundamental differences on discretionary spending among the various factions nearly led to a government shutdown. It’s worth noting that a few days before the budget deal that averted the shutdown, a group of more than 100 House Republicans signed a letter pledging to vote against any appropriations measure that didn’t provide for a minimum of $561 billion in defense spending, an amount that exceeded the budget cap by $38 billion. Whether or not President-elect Trump actually includes his campaign proposals to increase the size of the military there’s no reason to believe that the differences over discretionary spending priorities that existed in the last Congress will have somehow gone away.

Overriding the debate on defense versus nondefense spending are two larger issues.  First, there doesn’t appear to be a clear answer as to how to narrow the gap between current defense plans, especially for procurement, and the dollars that are likely to be available for defense over the next decade and beyond.

Second, even if defense hawks somehow prevail in the short term, the discretionary portion of the federal budget will continue to decline as mandatory spending, including interest on the federal debt continues to increase.  Over the last 15 years, discretionary spending has gone from 36% to 26% of spending. CBO projects that we are on track to add an additional $9 trillion to the $19 trillion national debt over the next decade.  Without a massive influx of revenue, it seems unlikely that we will be able to increase any form of discretionary spending, including defense

National Security and Intelligence Oversight Wanted: Will the 115th Deliver?

In the realm of national security, the heated rhetoric of the Republican nominee’s presidential campaign has given way to a somewhat mellowed President-Elect.  Mr. Trump has softened, and in a few cases, even revised some of his initial stances on major security and intelligence issues.  Much uncertainty yet remains over their future direction.

On Capitol Hill, Members from both parties have been cautiously observing and guardedly commenting on any major national security pronouncements and possible administration appointments. But in the era of unified government control, oversight in the 115th Congress, especially over sensitive intelligence policies and high-stakes national security developments, could prove to be a critical lever of the checks and balances mechanism. And next year promises to deliver panoply of tough issues that should keep the various committees in Congress charged with national security oversight occupied.

Major membership reshuffling on the two intelligence committees has already begun. The most significant change has occurred on the Senate side, where longtime Democratic Vice Chair and former Chair of the Intelligence committee, Sen. Dianne Feinstein, has opted to become the top Democrat on the Judiciary Committee instead.  The more telling move, however, may be the selection by the Democratic leadership of Sen. Mark Warner to become the new Vice Chair of the committee, passing over the more senior (by service on the committee) Senator from Oregon, Ron Wyden.

Both Warner and Wyden have been active on the encryption and cybersecurity debates but Sen. Wyden’s more combative style in openly criticizing the government’s various intelligence programs, may have tipped the scales in Sen. Warner’s favor. Next year may be an important one in trying to tackle encryption issues (although legislation may be hard to pass) along with debates on the renewal of section 702 of the Foreign Intelligence Surveillance Act which provides critical legal framework for intelligence collection programs of the National Security Agency.

On the House side, continuity at the top is the name of the game where the current Intelligence Committee Chair, Rep. Devin Nunes, and ranking minority member, Rep. Adam Schiff, are both expected to continue in their roles in the 115th Congress. This may prove beneficial by not disrupting the flow of the more routine day-to-day oversight of the committee. In addition, the two leaders have been instrumental in passing their version of the annual intelligence authorization bills on time. Expect this tradition to continue.

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