Takeaway: Congress is on track to deliver a record FY19 Defense budget on time.

Congress is just one step from cementing the largest two year Pentagon budget increase since 9/11.  Of particular note, this will be the first time in 12 years that all action will be complete on time (before October 1). 

  • On August 23rd the Senate approved by a resounding 85-7 vote an amended version of H.R. 6157, the previously House-approved appropriations bill for 2019 (House vote was 359-49).  After the House reconvenes from its summer recess, a short House-Senate conference will be held to resolve the very minor differences between the two versions before going to the President. (see below). 
  • While the President has threatened to hold up the bill and shut down the government over the "wall" and immigration as recently as July 29, Congressional leaders have been assured that that won't happen one month before the elections.
  • The policy-oriented John S. McCain National Defense Authorization Act for 2019 was already signed into law by the President on August 3. 

The Administration proposal and the House and Senate versions all conform to the two year topline agreed by all parties for 2018 and 2019.  However, both the House and Senate versions differ from the PresBud by increasing investment at the expense of minor reductions to the Administration's requested increased of Operations and Maintenance (O&M) funds.  The Senate "found" even more money within the same topline through a series of recissions of prior year appropriations and applied it to RDT&E. 

Record 2019 Defense Budget At the Finish Line - Screen Shot 2018 08 26 at 7.11.17 PM  

Principal investment differences between Congress and the Administration are all in favor of defense industry, i.e., no major Administration proposals are significantly cut but several are significantly plussed up more than requested. There is consensus within Congress that the F-35, F/A-18, shipbuilding, missile defense and ground logistics programs will receive more money than requested. 

Differences between the House and Senate bills over where the increases are going are relatively minor in the greater scheme of things. In general the Senate version adds more money for AH-64 Apaches (BA), shipbuilding (HII), light attack (either TXT or SNC) and R&D (hypersonics, directed energy and test ranges) than the House. The House version reflects the influence of Kay Granger, chair of HAC-D and representative from Texas, home of Lockheed Aero and Bell.  The House wants to add more money than the Senate to F-35s, V-22s, C-130s and ground logistics.  In our assessment, the Senate version of increases will likely prevail in most cases when the conference is complete.  However,  as stated above, in the end each of the areas will end up with more money than requested.  

Record 2019 Defense Budget At the Finish Line - Screen Shot 2018 08 26 at 11.47.07 PM