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Posted: March 15, 2017 4:35 PM

Analysts See Budget Mismatch with Trump Defense Plan

By RICHARD R. BURGESS, Managing Editor

WASHINGTON — Some defense analysts see a disconnect between the plans of President Donald J. Trump’s administration to increase the size and capabilities of the U.S. military and the ability to fund the build-up without significant disruption to the discretionary portion of the U.S. budget.

In a March 15 discussion at the American Enterprise Institute (AEI) centered on the Overseas Contingency Operations (OCO) supplemental budget concept, AEI’s Mackenzie Eaglen hosted Brookings Senior Fellow Michael O’Hanlon, AEI Visiting Fellow Roger Zakheim, and former Office of Management and Budget Associate Director for Defense and International Affairs Steven Kosiak.

The OCO is not a recent concept, Eaglen said, but “what is new is the longevity” of the use of the concept.

The major controversy over the OCO concept is the temptation for the Defense Department to fund things like procurement that should be in the base budget, she said.

“I will take the OCO over the plausible alternatives,” O’Hanlon said.

Kosiak noted that, with the OCO, the Defense Department has a mixed record in transparency but has been “meaningfully disciplined” in what the OCO funds, and “has done a good job about not raiding the base budget” to fund current warfighting.

The discussion gravitated toward Trump’s plan to add $54 billion to the 2018 base budget, which O’Hanlon saw as a “modest increase.”

“I have no problem with Trump’s $54 billion,” he said. “I have a problem with how we’re paying for it. I don’t see where we can cut domestic spending.”

O’Hanlon said he would prefer to see misuse of OCO in the short term rather than cuts in the budgets of the Coast Guard, the State Department and security assistance, as well as important domestic accounts.

Zakheim warned of the structural challenges of the budget that seem unsurmountable, noting the difficulty of lifting the budget caps of the 2011 Budget Control Act with the tension between the “budget hawks” and the “defense hawks.” He said the proposed budget will be like “Band-Aids on cuts, but not the rebuild he [Trump] calls for.”

“That deficit reduction came on the backs of discretionary spending,” he said. “It’s trying to dig out of the hole. We do not have a budget that gets at the problem set. We need a budget that takes into the account of the new reality” [of Russia as the No. 1 threat].”

Eaglen said that Trump’s budget “will please no one” and that it would be “throwing fuel on the same old fights of the last administration.”

While Kosiak saw the $54 billion as a 10 percent increase in the defense budget, O’Hanlon said it was 10 percent “relative to the sequestration level,” therefore less than 10 percent.

“I think we should go up toward $650 billion [for the 2018 base budget],” O’Hanlon said, “It’s 10 to 15 percent [build-up] that we’re trying to fund with a 3 percent increase in the base budget. You do have to spend two-thirds as much, at least, in your overall base budget, 7 to 12 percent increase in base budget for the Trump force structure. In other words, the money’s not there.

“If you literally combine the proposed $54 billion with the proposed increase in force structure, you make the mismatch worse. In budgetary terms, at the moment the Trump plans do not connect,” he said.

Kosiak said that entitlement accounts — such as Social Security and Medicare — would have to be addressed, as well as consideration of tax increases, to address the budget shortfalls.

O’Hanlon recommended that the traditional division of discretionary spending as between defense and domestic be reformulated into three categories: defense, non-defense security and domestic. The non-Defense Department security category would include homeland security, the Coast Guard, veterans care, infrastructure, scientific research and nuclear weapons development. He said this breakdown “may help with the politics.”



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