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Budget deal gives DOD stability, almost all its money

October 27, 2015 (Photo Credit: Alex Wong/Getty Images)

A sweeping new two-year budget deal unveiled by the White House and congressional leaders late Monday would give Pentagon planners the fiscal stability they have been begging for, but falls about $5 billion short of what they hoped to receive in fiscal 2016.

If finalized, the agreement would stave off the threat of a government shutdown for the rest of President Obama's term and raise the national debt ceiling until spring 2017. It also would be the second partial fix to the mandatory federal budget caps that were passed by Congress in 2011 and have been lamented ever since.

Under details of the "bipartisan budget act" provided by House Republican leaders, the caps on defense spending would be raised by about $25 billion for each of the next two fiscal years, to $548 billion in fiscal 2016 and $551 billion in fiscal 2017.

That, combined with nearly $59 billion in overseas contingency operations (OCO) funding for each of the next two years, would nearly match Pentagon budget plans for the near future.

Obama and congressional Democrats had opposed any budget plan to fully fund defense spending without equal increases in non-defense programs and stalled a series of federal appropriations measures — including the fiscal 2016 defense budget — over the spending fight.

In addition, Obama vetoed the 2016 National Defense Authorization Act last week over those spending differences, despite Republican assertions that the measure was largely a policy bill separate from the budget impasse.

Under the compromise, non-defense spending caps would be upped by $25 billion in fiscal 2016 and $15 billion in 2016, and another nearly $15 billion would be added in non-military costs to the temporary war funding accounts each of the next two years.

The move comes just days before House Speaker John Boehner, R-Ohio, leaves Congress and less than a week before the nation's borrowing authority is set to run out. Boehner said his chamber would vote on the measure by week's end and that he expects bipartisan support for the deal.

"The agreement isn't perfect by any means, but the alternative was a clean debt-ceiling decrease without any support for our troops, without any entitlement reforms," he said Tuesday. "So this is a good deal, for our troops, our taxpayers and the American people."

Several members of the House and Senate Armed Services Committees indicated that they would support the measure, even though the $607 billion in fiscal 2016 defense spending falls about $50 billion short of the mark they've been lobbying for all year.

Earlier this month, 102 House Republicans sent a letter to chamber leaders calling for a federal budget that "fully funds defense" at a $612 billion total. Rep. Mike Turner, R-Ohio, who helped organize that effort, on Monday indicated that he would back the new deal, despite the shortfall.

"There is tremendous value in a two-year deal, as it provides the Department of Defense with the certainty it needs to plan for and execute various missions around the world," he said in a statement.

Sen. John McCain, R-Arizona, chairman of the Senate Armed Services Committee, told The Hill newspaper late Monday that he was "not happy, but I'm largely satisfied" with the budget deal.

"I think it's the best deal we can probably get," he said. "It's bipartisan, and it prevents a government shutdown."

House Armed Services Committee Chairman Rep. William "Mac" Thornberry, R-Texas, said that while the pact was "not ideal" for defense and had not repaired four years of cuts, two years of predictability at a level close to the president's budget request and the GOP's budget plan was good enough for him. If anything, he faulted the offsets to reach the deal.

"I don't think it's what anybody would choose, but if you look at it for defense, it's better than the other alternatives," Thornberry said. "Not only do we set this year's number, but next year's number. That enables us to get into the programmatics and the policy, and not spend as much energy on the budget."

Despite offsets that may prove unpopular, Thornberry said he believes the deal will have the votes to pass, given the "significant bloc of members … who really put defense at the height of their priorities."

As to where the $5 billion difference would come from, Thornberry said it represents "real money, real capability that we lose," but that the committee will be working with appropriators to match the cuts in each bill.

On the 2016 NDAA, lawmakers could override the president's veto or have a new bill that adjusts funding to reflect the deal, Thornberry said. Either way, he was confident that the bill he and McCain had worked months to craft would be approved by Congress "one way or another."

"Nobody [is] going to walk away" from the myriad policy provisions it contained, including defense-acquisitions reform measures, Thorberry said. He predicted that a plan to resurrect the NDAA would emerge next week, after the pending leadership change is resolved.

Pentagon officials repeatedly have labeled the $612 billion defense budget level as the "lower ragged edge" of what needs to be spent to preserve military readiness. However, they have also largely rejected one-year budget strategies that they argue do not provide enough long-term stability for the procurement and planning process.

On Tuesday, Defense Secretary Ash Carter told members of the Senate Armed Services Committee that he hadn't yet read all of the budget deal details, but he called it a "major positive development."

"As I've said consistently since March and continue to believe, Washington needs to come together behind a multiyear budget deal that supports our defense strategy, the troops and their families, and all elements of Americans' national security and strength," he said.

The deal not only opens a path to pass a new defense appropriations bill in coming weeks, but also for lawmakers to revisit the vetoed authorization bill, which contains a host of specialty pay renewals and an overhaul of the military retirement system, among other reforms.

But it's also likely to irritate fiscal conservatives who had resisted plans to raise defense spending and flatly opposed plans to increase other domestic program budgets.

To offset the extra spending, the budget deal includes the sale of millions of barrels of oil from the Strategic Petroleum Reserve over the next decade, modifications in federal health care rules, a handful of minor tax code changes and several other revenue changes.

The deal also eliminates a host of budget-related fights for incoming House Speaker Paul Ryan, R-Wis., and delivers some level of budgetary calm during next year's presidential election.

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