We have a budget deal: what comes next?

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

The passage of the Bipartisan Budget Act of 2013 gave the Defense Department some relief from the sequester and some breathing room to adjust its spending beyond fiscal year 2015 to fit within the budget caps that Congress mandated in 2011.

At press time, Congress was still working on an omnibus appropriations bill for fiscal year 2014. The Bipartisan Budget Act suspended the sequester for fiscal year 2014 and 2015 and increased the Budget Control Act caps for those years. Now we need a budget that complies with those parameters.

Congress has been working against the legislative markups of the president's 2014 budget submission. That budget was submitted not in compliance with the BCA caps, but Congress marked it up anyway. Now lawmakers are working to adjust that framework to bring it in line with the BBA. They are collaborating with the services and the office of the secretary of defense to ensure a proper balance in the various accounts, so we expected a budget in January that presents a reasonable approximation of a balanced budget within the new cap limits.

The Defense Department's base budget for fiscal year 2014 will come in at around $497 billion and approximately $497.8 billion for 2015. It is essentially flat with the fiscal year 2013 level of $496.6 billion, although a decline in inflation-adjusted dollars. These figures are for the base budget, which is roughly 95.5 percent of the larger national defense budget account.

The two-year budget deal should give the services time to make the necessary force structure adjustments before going back under the BCA caps in 2016.

As Defense Secretary Chuck Hagel noted when he unveiled the Strategic Choices Management Review, it is not possible to comply with sequester in any rational way. The cuts needed to be back loaded to do it right.

The two-year reprieve appears to be satisfactory at least to the Army, which had been under enormous pressure to keep forces trained and ready following the 2013 sequester. Army Chief of Staff Gen. Ray Odierno said he will now be able to reduce force structure in a more measured way to a target of 490,000 by the end of fiscal year 2015--compared to fiscal year 2017 in the sequester budget. When asked whether he would commit to going down to 420,000, he said that when the Army reached 490,000, it would reevaluate the situation. He insisted that decisions have not been made on further force reductions.

Interestingly, Odiemo addressed the controversial issue...