Defense sector warns debt-ceiling deal budget cuts are deeper than advertised

The defense community is sounding a drumbeat that the August debt-ceiling deal would cut substantially more than the often-cited figure of $350 billion.

While the Budget Control Act never mentions the $350 billion cut, it became conventional wisdom in Washington after the White House included it in a fact sheet released shortly after the deal was struck.

“The deal puts us on track to cut $350 billion from the defense budget over 10 years,” the July 29 fact sheet states. “These reductions will be implemented based on the outcome of a review of our missions, roles, and capabilities that will reflect the president’s commitment to protecting our national security.”

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While some Republicans and Democrats are bickering over just what the Budget Control Act requires, the Defense Department is leading a soup-to-nuts review of national security needs that will help officials decide how best to cut the $350 billion.

Just weeks after the debt-reduction measure was signed into law, however, a new number emerged.

Several pro-defense Republicans said the debt-deal would really produce a funding reduction $100 billion larger than advertised by the White House.

Then, Aerospace Industries Association (AIA) chief Marion Blakey, a top defense industry lobbyist, said the real size of the cuts would fall between $460 billion and $480 billion through 2023.

“That is simply more than we can sustain,” Blakey said, echoing the line many pro-defense Republican lawmakers have taken in recent weeks. “Our position is: no more.”

Sources said the larger estimate of the debt-deal cuts came from the Defense Department.

“I believe the numbers originally came out of [the Office of the Secretary of Defense], based on their projections of base budgets going into the future. It’s complicated,” one defense source said. “The BCA doesn’t actually impose a hard cut number on defense per se. … A further problem is that the caps aren’t indexed to inflation ... so the erosion of buying power over time becomes significant.”

AIA spokeswoman Alexis Allen said the trade association has been “told by DoD and the Hill that this is the number they are working with,” noting “we don’t have the methodology on this though at this point.”

A Pentagon official, in an email to The Hill, described how the Pentagon arrived at the larger figure.

“The $350 billion figure is based upon the Congressional Budget Office (CBO) baseline often used by Congress and the Office of Management and Budget (OMB), which is lower than the president's 2012 budget request,” the Pentagon official said. “That request remains under discussion on Capitol Hill.

“Under the Budget Control Act ... the Department of Defense could expect a budget cut of more than $450 [billion]-$460 billion — using the amount requested in the president's budget for 2012 as the baseline,” the Pentagon official said. “When the different starting points are taken into account, a reduction of $350 billion from the CBO baseline in January is equivalent to the $460 reduction based upon the president's 2012 request.”

One Pentagon budget observer said the budget debate’s dueling figures reflects an ongoing struggle been DoD and OMB officials.

“This dispute about defense savings targets is a political one — the Pentagon wrestling with OMB and the administration posturing with Congress,” said Matthew Leatherman, a defense analyst at the Stimson Center. “The law itself says nothing specific on the matter. Pentagon resources are already tightening, but the final numbers are still to be determined.”