New budget spells more uncertainty for DoD.

• Author: Farrell, Lawrence P., Jr.
• Position: President's Perspective

* President Barack Obama sent to Congress a proposed defense budget of $526.6 billion for fiscal year 2014. That top line, however, ignores the fact that it would be subject to a $52 billion sequester cut, as Congress mandated in the Budget Control Act of 2011.

Defense Secretary Chuck Hagel acknowledged this reality when he unveiled the budget proposal. "Unfortunately, fiscal year 2014 programs will be significantly and adversely affected by sequester budget cuts in fiscal year 2013. Training cutbacks, civilian furloughs, deferral of equipment and facility maintenance, reductions to energy conservation investments, contract inefficiencies and curtailed deployments will inevitably have rippling effects into fiscal year 2014."

Obama's recommendation to address this problem is a deficit reduction plan--a combination of tax code reforms and reductions in entitlement programs--to replace and repeal the sequester.

Whether sequester will be repealed in a "grand bargain" on taxes and spending remains to be seen. No one anticipated what happened in fiscal year 2013: a modified continuing resolution, with sequester. The legislation gave the Defense Department some flexibility to adjust account imbalances, but the sequester on a base budget of $518 billion tightened things right back down. Going in, the department was short about $10 billion in operations and maintenance accounts. Coming out, O&M is still insufficient.

Civilian furloughs have been reduced from 22 to 14 days. Pay is still flat for government civilians employees, and the military services are beginning to cut back training. As of this writing, the actual cuts to the various appropriations accounts and their impacts have not yet been disclosed, but it is expected that programs in the procurement accounts will be seriously affected.

It goes like this. Less money means fewer "eaches," with less capability per each. The price per item goes up. So for less money, defense gets much less capability at a higher cost per unit. Sequester is specific that all accounts, programs, projects and activities get equal hits, there is little flexibility to protect higher priority programs. All is far from well.

Where does this leave defense in terms of its posture to execute national tasking? On March 20 in Jakarta, Deputy Defense Secretary Ashton Carter said that the rebalance to the Pacific remains the Defense Department's top priority, and that sequester will not have a long-term impact on the strategy...