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U.S. HOUSE APPROVES NON-BINDING BUDGET RESOLUTION
Wednesday, March 25, 2015

Source: Forecast International (Shaun McDougall)

WASHINGTON - The U.S. House approved a non-binding budget resolution that would add billions of dollars to the Pentagon's off-budget war account as a way to sidestep sequestration spending limits, despite early reservations with the plan from some lawmakers. Under the Budget Control Act, national security spending is capped at $523 billion in FY16. This figure includes the Pentagon's base budget, defense programs in the Department of Energy, and related programs in other agencies, but the DoD base budget account for over 95 percent of all national security spending. The DoD base budget is capped at $499 billion.

The Pentagon's FY16 request seeks $534.3 billion for the base budget, exceeding caps by about $35 billion. Another $50.9 billion is included in the Pentagon's Overseas Contingency Operations account, which is not subject to spending caps. When accounting for all national security spending, the FY16 request includes $561 billion in base spending, and $58 billion for OCO, for a total of $619 billion.

Over the past week, lawmakers in the House and Senate have been debating a number of budget proposals that would fund the Pentagon at or close to the request level. The recently passed House bill would keep base spending at BCA levels, but would boost the OCO account to $96 billion, an increase of $38 billion. Before the resolution was passed, the House also voted on a similar plan that would have required $20 billion from the defense increase to be offset elsewhere in the budget. The plan that required no offsets won out, meaning that $20 billion will be applied to the deficit.

The plan to use the OCO account as a massive slush fund in order to avoid sequestration limits was chastised by deficit hawks early on, though lawmakers have come around in support of the bill. Not everyone is convinced, however, including the Pentagon. Military leaders have spoken out against the plan to use the OCO account to boost defense spending, primarily because the tactic removes predictability from the budget process. It is important for program managers to have some idea of how much money they will have over the coming years as they plan timelines for development, contract awards, and production. Using the OCO account as a bandage for a single year provides no predictability, which can lead to program delays and cost growth as program managers respond to budget uncertainties.

It is important to remember that the House budget resolution does not represent the budget in its final form, and many changes will be made throughout the budget process. Lawmakers may change their stance as they hear more from defense officials, and the budget plan must still proceed through committee markups and floor debates. The Senate is expected to vote on its own budget plan by the end of the week. Senators have also suggested using the OCO account as a backdoor to boost defense spending.

Part of the GOP budget strategy actually revolves around repealing the president's health care legislation, known as Obamacare. If the House and Senate can come to an agreement on their budget plans, they could take advantage of the complicated reconciliation process to send a provision to repeal Obamacare to the president's desk. Though the president would veto the measure, it would be the closest Republicans have come in their fight against Obamacare.

Source:  Defense News
Associated URL: http://www.defensenews.com/story/defense/policy-budget/congress/2015/03/25/house
Source Date: March 25, 2015
Author: S. McDougall, North America Analyst 
Posted: 03/26/2015

 

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