A top U.S. commander in Iraq said the terror groups is switching to "defense."
A measure to ease detainee transfers was dropped from a compromise bill.
Josh Earnest said they anticipated the bill would include "disappointing" provisions.
The secretary of State said U.S. strategy against ISIS is "starting to gain traction."
Obama has renewed a push to close the Guantanamo Bay detention facility by the end of 2014.
"This war is illegal until Congress acts," said Paul.
Negotiators unveiled the proposed cuts as part of a 2015 defense authorization bill.
The Pentagon reversed its decision to wait until Congress approved funding.
The Defense secretary said the group's gains had been "reversed" in some areas.