The good news: three of the four Congressional defense committees have spoken and the Pentagon will get at least $663B in FY 2018 - $25B more than requested by the Trump Administration and $42B more than was planned for just eight months ago.
The bad news: the desired Defense allocation exceeds the Budget Control Act by $70 to $81B.
The House Armed Services, House Appropriations, and Senate Armed Services Committees have reported their marks and have arrived at essentially the same topline proposed by defense hawk Senator John McCain in January. The Senate Appropriations Committee, which traditionally goes last in the sequence and is usually the most authoritative of the four, will mark the President's request later this month.
Status of DoD Budget Request for FY18 ($B)
Each of the committees arrived at essentially the same total using slightly different combinations of base and OCO dollars that are in and of themselves not really significant and will be quickly resolved. Why the amounts differ is significant: Congress has yet to pass an overarching budget resolution that shows how defense discretionary spending will fit into the overall Federal budget. Without top down guidance, each of the committee chairmen was left to his own devices.
While there is consensus that more money must go to defense, particularly in the face of the ever more perilous global situation, there is no consensus, even within the Republican party, let alone between Republicans and Democrats, as to how that can be made to happen.
The current Budget Control Act caps total discretionary spending at $1.151T in FY 2018, $37B less than in FY 2017. Only $549B is allocated for "defense" baseline spending (95% or $522B to DoD and 5% to DoE et al). Republican fiscal hawks want to find the $70B to $81B increase for DoD from somewhere else in the $4.2T total Federal budget, e.g., non-defense discretionary or entitlements, while Democrats simply want an equivalent increase in non-defense spending, e.g., infrastructure spending.
House Budget Chairperson Diane Black says she is close to getting House agreement on a Budget Resolution that will pay the bills by cutting entitlements by 1%. Even taking that at face value, the Senate is where the action needs to be and there is no action there yet. Changing the Budget Control Act and avoiding sequestration of spending to BCA levels will require Democratic votes. This is going down to the wire. The earliest we can expect to see how this turns out will be September 30.
