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What Does the New Spending Law Mean For the Pentagon?

Congress has just completed work on a massive spending bill that keeps the Pentagon goodies coming. Overall, this appropriations bill, known as an omnibus, provided more than $1 trillion to keep the government funded for the remainder of FY 2014. More than half of that funding—around $600 billion—goes straight into the Pentagon’s coffers.

For the better part of two years, we have heard consistently from military leaders and defense hawks in Congress that spending constraints implemented by the Budget Control Act would wreak havoc on America’s national security needs. Now, more than two years later, Congress has passed a defense spending bill that conforms to the Budget Control Act’s spending limits (though some last minute sequestration relief was provided over the holidays). Let’s take a quick look at some of the winners and losers for taxpayers in the spending bill.

Losers for Taxpayers

For some time now, the Pentagon has been wrestling with increased scrutiny from Congress and the public over its $1.5 trillion F-35 Joint Strike Fighter—the most expensive weapons system in American history. The Joint Strike Fighter has almost doubled in price since its original cost estimate and is nearly a decade behind schedule. Just a few months ago, then-acting Secretary of the Air Force Eric Fanning announced that the service was considering cutting 24 Joint Strike Fighters from its five-year budget. However, the defense spending bill just enacted by Congress fully funded the Pentagon’s F-35 procurement order of 29 aircraft in FY 2014, though the bill does cut some advanced procurement funding for the F-35 in FY 2015.

Another big loser for taxpayers in the omnibus bill is the Littoral Combat Ship, although the program’s good tidings may soon wane. The omnibus bill fully funded the Navy’s FY 2014 request for four vessels. At the same time, though, the office of the Secretary of Defense has reportedly ordered the Navy to significantly truncate the program—cutting twenty vessels from planned purchases. The Project On Government Oversight has long been concerned about this program, and has previously called for substantial reductions in its procurement.

Let’s set aside for a moment individual weapons systems and take a quick look at just one naval vessel, the USS Gerald Ford, currently under construction. This boat will be the most expensive vessel ever constructed. The Navy currently estimates that it will cost $12.8 billion to manufacture—a 22 percent increase over its original cost estimate—though CBO puts the total cost at closer to $14 billion. Overall, the Navy plans on purchasing three Ford-class carriers for a total estimated cost of $40 billion. However, a recent unreleased memo from the Pentagon’s top weapons tester found that the Gerald Ford is “unlikely” to meet operational requirements and its aircraft launch system is “suffering from development problems.” Ultimately, the report found that unless critical glitches are addressed, the Ford-class of carriers may be no more capable than the legacy carriers they are intended to replace. The omnibus spending bill provided more than $900 million for the USS Gerald Ford.

Winners for Taxpayers

The omnibus did have a couple of notable winners from a good government perspective. This includes a cut in funding for the Afghanistan Infrastructure Fund (AIF)—an account rife with waste, fraud, kickback schemes, and bribery, and so far has contributed very little to Afghanistan’s redevelopment. Last year, POGO and our allies supported a successful effort by a bipartisan group of House lawmakers to cut funding for the AIF. As a result, the omnibus spending bill provided $80 million less for the infrastructure fund than what was requested in the FY 2014 budget request. The omnibus also carried forward a provision from the House bill which prevents new construction projects from being initiated.

POGO has also supported efforts to eliminate wasteful spending in the Afghanistan Security Forces Fund. A notable example of waste in that fund is the C-27A transport plane that the United States had been acquiring for the Afghan Air Force. Program managers at the Pentagon failed to ensure the availability of critical spare parts necessary to keep the plane operating, and so the sixteen aircraft that have been purchased so far have been sitting on the ground in Kabul instead of being flown. The spending bill cut $3 billion from the security services fund relative to the FY 2014 request.

Another positive item in the spending bill was a significant cut to the Ground Combat Vehicle (GCV) program—intended to replace the Army’s armored fighting vehicles. Last year, the nonpartisan Congressional Budget Office analyzed the GCV program and found that two of the three alternative options would be less expensive and more capable than the new GCV. In FY 2014, the Pentagon requested more than half a billion dollars to continue development of the GCV. Congress cut that requested amount down to $100 million in the spending bill—reportedly just enough funding to begin the process of shutting down the program.

Stuff the Military Doesn’t Want

Since passage of the Budget Control Act in 2011, military leaders have proposed some modest cuts and program terminations in an attempt to reduce spending. For two years in a row, the Pentagon has proposed retiring nine aging Navy vessels as well as a high altitude surveillance drone called the Global Hawk Block 30. Yet, for the second year in a row, Congress has blocked these savings from accruing. In fact, the spending bill provided $10 million in unrequested funding for the Air Force to conduct a study on improving the Block 30 drone.

Another example of wasteful spending that Congress refuses to relinquish is the M1 Abrams tank. Congress has repeatedly provided funding for upgrades to the M1 fleet that the Army has said adamantly it does not need. The omnibus spending bill provided an additional $90 million for that effort.

What Does It All Mean?

In nominal terms, FY 2014 represents the lowest point for the Pentagon’s budget during the FY 2008-2021 budget window. Next year, the cap on defense spending will rise slightly without adjusting for inflation. In real terms, the defense budget will continue to decline until FY 2016 and then remain relatively flat until FY 2021. This may be seen as a real loss by the defense lobby, since they were fighting to undo spending constraints altogether. But, it’s also hardly the doomsday defense budget they predicted under the caps for the Pentagon. It seems as if taxpayers are still the biggest losers in this bill.