By Laicie Heeley When lawmakers return to Congress in September, they’ll face a series of pressing budgetary decisions in need of immediate attention, and a packed agenda likely to draw their attention away. Republican leaders have already conceded the likelihood of a stop-gap funding bill, or continuing resolution, when the end of the fiscal year arrives on September 30. But the latest reports have lawmakers mulling the possibility of a yearlong Continuing Resolution for every part of the federal budget, including defense. CRs have become commonplace, especially in the past few years, but a year-long CR has little precedent. Unfortunately, it could be the path of least resistance for Congress, especially in an election year, leaving the Pentagon to pick up the pieces of Congress’ refusal to adhere to one of its most basic responsibilities: setting the budget.
The issue at hand is the 2011 Budget Control Act caps. In short, the caps place limits on defense and domestic spending during the years fiscal 2012 to fiscal 2021. If congressional appropriations exceed those spending caps, the Office of Management and Budget is required to make automatic, across-the-board sequester cuts. But this year, the president sent Congress a budget request that would break those caps for defense by $38 billion, paying for the adjustment through changes in tax laws and mandatory or entitlement programs. Since the Republican Congress could not agree on raising the caps, or raising taxes, they dodged the issue by adding the $38 billion to defense spending that isn’t subject to the caps — the Overseas Contingency Operations budget. The Republican budgetary tactic has been critiqued as “budget gimmickry” and a “slush fund,” adding money to what is supposed to be a war-related account for things that have nothing to do with America’s current combat deployments.
And the Pentagon doesn’t like it. Secretary Carter has called this tactic a “road to nowhere,” that makes long-term planning impossible; he prefers an outright increase in the defense cap, as the president has proposed. Carter is careful to add that the non-defense caps should go up at the same time, as the president asked. This is a key term of the president’s threat to veto any appropriations bill that raises the defense caps — or effectively does so by shifting funds to OCO — without a corresponding increase in non-defense.
In the face of this dilemma, lawmakers are likely to put off the decision — through a short-term CR, or by agreeing to a smaller increase in both caps, the way Ryan and Murray did two years ago. But the “cap increase” scenario is problematic as presidential campaign season heats up and lawmakers take more extreme, electorally-driven positions. This is where we’ve begun to hear murmurs of a yearlong CR.
What would that mean for defense? A CR would likely be funded at the FY 2015 level, $38 billion below what the President asked and what the Republicans have voted, so far. Former Defense Department Comptroller Bob Hale has said that short-term CRs are doable for DoD, but, “a lousy way to run government,” and “exponentially more disruptive as they extend into the calendar year… a classic CR for a year is a nightmare.” And a 2009 Government Accountability Office study reported that continuing resolutions often result in inefficiencies, including, “delays to certain activities, such as hiring, and repetitive work, including issuing multiple grants or contracts.”
With regard to the level of funding, a yearlong CR would mean tough choices at DoD, since the Pentagon has built a budget request that’s $38 billion higher than what they would get. But then, a CR could also provide a higher level of OCO, a $13 billion increase if funded at 2015 levels. Ultimately, while the Pentagon could easily get by at this level, it would make a mess of the department’s planning, not to mention a mockery of the budget process. Given lawmakers’ current failure to mobilize, however, the Pentagon would do well to have a contingency plan in place.
Laicie Heeley is a fellow for the Budgeting for Foreign Affairs and Defense program at the nonpartisan Stimson Center.