Across the Navy staff, one and two star admirals are busy closing out their "Sponsor Program Proposals" (SPP) for POM 13. For those not lucky enough to have built a POM, this means that the building blocks for the Navy's FY 13 budget are now being assembled. A process akin to pulling one's lip over the top of one's head follows submission of the SPP, as the POM process moves toward budget submission. The way the cycle moves, sometime in February of 2012, "The President's Budget" for FY 13 will be sent to the Congress--which will chew on it all year and theoretically produce the necessary bill to fund the Navy's business (along with the rest of the nation's business).
This is the process that took place in late winter of 2010, when the FY 11 budget was sent to the Hill. Democrats controlling the Congress decided they had better things to do than pass a budget, and so a new Congress took its place in January of 2012 operating under a "continuing resolution". As I predicted in this blog (and many others did elsewhere), the House--now controlled by Republicans--would be out to earn some skins. That is--60 some odd new members believe they were sent to the House to CUT SPENDING, and while the Tea Party represented many things, it was not at its heart a group of national security hawks. Playing their own brand of politics, Republicans in the House realize that if they simply continue to operate under a FY 10 continuing resolution, FY10 spending levels will be maintained--that is, spending increases contained in the FY 11 budget DO NOT HAPPEN. SECNAV and the CNO have been up to the Hill to talk about how devastating operating with FY10 funds is to the FY11 Navy, but their cries seem to be falling on deaf ears with the budget hawks.
I hope you're following me, because here's where it gets interesting. The last actual budget we have is the FY 10 budget. The FY 11 DoD budget was built around the "FY 10 Baseline"; that is, the jumping off point was the FY 10 budget. POM 12--which became "The President's Budget" when it was submitted to the Congress a few weeks ago--was built on the FY 11 baseline. And now--POM 13--being built methodically by galley-slave action officers across the Navy staff--is built on the FY 12 baseline. Guess what? The FY 11 baseline is a fiction (that is, it hasn't been passed by the Congress) and the FY 12 baseline is even MORE of a fiction. The present Congress (House, at least) does not feel beholden to the work of the previous. Since there was no FY11 budget--the "baseline" against which PRESBUD 12 will be compared is the FY 10 budget. And the dirty little secret is that there are some members of the House who would be happy to see all of NEXT year funded by CR--because it effectively freezes FY 10 spending levels, and doing so offers considerable leverage in negotiating spending decreases with the President.
So what is the crisis, you ask? The FY 10 DoD budget reflects POM submissions made before the fiscal crisis became the driving force in our economy--i.e in "good times". FY 10's baseline--increased even slightly in FY 11 and FY 12--is the high water mark of DoD--and POM's being built now for FY 13 that reflect a baseline any higher than FY 10 are in deep jeopardy. Put another way, the stage is being set for ridiculously painful bogey drills in the Pentagon this coming summer when the methodical (but laggard) POM process is shocked by the more dynamic (and political) budget process. Navy AO's could find themselves making cuts to programs NOT based on what was in their FY 12 submission--but what was in their FY 10 submission....which some AO two tours ago put together in the spring of 2008.
This will not be a Navy problem only--the entire Department of Defense may face this. And that is the opportunity. Perhaps now, the vapidity of the equal share budget formula will be exposed for the bureaucratic crutch that it is. Perhaps now, the budget will begin to reflect the reality of Secretary Gates' words at West Point, in which he told a group of cadets wondering if they had made a poor choice in Service academies that the nature of conflict in the future will be abidingly Naval and Air. Perhaps now, we'll recognize the fact of our drawdowns in Asian land wars even as our East Asian friends and allies nervously urge us to become more engaged in the Pacific and Indian Oceans.
The coming defense budget crisis offers opportunity to think anew, to recognize that we spend PLENTY on defense, but that it is spent inefficiently and without recourse to strategy. It is time to UNBALANCE the defense budget, to fund those elements of national power more central to preserving and sustaining our national power while modestly de-emphasizing those with little peacetime return on investment. Some believe this debate will be central to the 2013 Quadrennial Defense Review. I disagree. The debate is upon us. The only question is whether we will answer.
UPDATE (14 March): The following is from a 14 March Defense News story (behind the firewall) by Marcus Weisgerber, and refers to statements by OSD Comptroller Robert Hale:
“I’m not sure what we’ll do this year,” said Robert Hale, the Pentagon’s comptroller and chief financial officer, during a brief interview following a March 10 taping of “This Week in Defense News.” “It’s a fairly fluid situation.” Five-and-a-half months after the start of the fiscal year, Congress has yet to pass a 2011 defense budget. Instead, lawmakers have passed a continuing resolution (CR), which forces DoD to operate at 2010 spending levels. “It is very difficult. We don’t know the base for ’11 and frankly don’t know what will happen in fiscal ’12,” Hale said of future budget planning. Now, the services are building their internal budget plans — the so-called 2013 program objective memoranda — which project spending through 2017. “They’re well along, but they understand they’ll have to make some changes,” Hale said after taping the TV show.
Bryan McGrath
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