The Senate Appropriations Committee, the last of the four Congressional committees key to the defense budget process, has allocated $605B in total Pentagon spending, $523B for baseline (includes MilCon) and $82B for OCO. This is the same as the amount enacted for FY17 on May 4 and essentially complies with the Budget Control Act cap. However, it is ~$61B less than the other three committees (HAC, HASC, SASC) have been marking and $33B less than requested by the President.
The committee stated that in the absence of an overarching budget resolution or a “deeming” resolution for FY2018, they had opted to begin their work using FY2017 enacted top-line funding levels. This is a completely different tack than was adopted by the HAC, HASC, or SASC, each of which allocated themselves a topline of ~ $666B and then made detailed marks against that.
The SAC topline is actually more realistic than what the other committees have done since any amount higher than the BCA will require a change to the law. A change will require a budget deal that will require 60 votes in the Senate. The deal must navigate the shoals of the fiscal hawks in the House who will only increase defense spending if the delta is found elsewhere in the $4T Federal budget and Democrats in the Senate who want equivalent increases in non-defense spending.
The Pentagon will view this topline as something akin to a "doomsday" scenario, as will defense industry. This topline doesn't even cover inflation (~$10B) let alone begin to remedy the Pentagon readiness and recapitalization crisis. While the previous three committees have been moving large chunks of the services' Unfunded Priority List into the budget, this topline will require cuts from the Obama planned budget level which goes in the opposite direction of Trump's "Make America Great Again" trope.
Although the SAC Defense subcommittee has not yet apportioned this topline, we can surmise that the apportionment of FY18 funds within this SAC topline will be similar to FY17. That only goes so far, however. Any bills for "fact of life" adjustments such as personnel and healthcare inflation will almost certainly come out of investment and O&M accounts. Adjustments within those accounts will not be evenly distributed since some programs are locked into multiyear contracts and other programs have built in increases that must be met in order to stay on track. For example, the B-21 bomber development is scheduled to grow from $1.3B in FY17 to $2.1B in FY18. That development will not be slowed so the $800M delta from FY17 will end up coming from more fungible investment accounts, e.g., F-35, F/A-18s.
More to come.
