Defense spending bears heavy burden from debt default deal

Opposition to the compromise that Congress struck to avoid default began before the bill even passed, and the cries have grown even louder in the hours since it became a done deal. 

Critics are citing many issues, including: the bill’s drastic crackdown on defense spending and the transparency implications that will arise as a 12-member, bipartisan super committee determines more specific spending cuts.

The bill, which the Senate passed Aug. 2 by a margin of 74-26, calls for $2.4 trillion in specific spending cuts during the next 10 years and establishes a joint committee that will be charged with identifying another $1.5 trillion in cuts for that same period by Nov. 23. Failure to identify the additional cuts would activate an automatic sequester that would levy massive additional cuts.

The House passed the bill Aug. 1 by a margin of 269-161. President Barack Obama signed it Aug. 2.

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The debt ceiling deal likely means painful changes for nearly every part of the government. The national security measures are particularly controversial because they account for half of the spending cuts outlined in the legislation. The deal has triggered an outcry in the defense community as many question whether the military will be able to meet wartime demands.

“I will support this proposal with deep reservations,” Rep. Howard “Buck” McKeon (R-Calif.), chairman of the House Armed Services Committee, said in a statement."Our senior military commanders have been unanimous in their concerns that deeper cuts could break the force. I take their position seriously, and the funding levels in this bill won’t make their job easier."

“Still, this is the least bad proposal before us," McKeon said. "What is clear is we have cut what we can from the Department of Defense, and given what’s at stake, it is essential that the joint committee include strong national security voices. There is no scenario in the second phase of this proposal that does not turn a debt crisis into a national security crisis. Defense cannot sustain any additional cuts either from the joint committee or the sequestration trigger.”

Rep. Randy Forbes (R-Va.), chairman of the committee's Armed Services Readiness Subcommittee, voted against the bill because of the potentially dire consequences for the military.

“Our nation’s highest military commanders have stated on the record that deep defense cuts would be ‘extraordinarily difficult and very high risk.’ The most conservative estimates place total defense cuts over the next decade at nearly $900 billion, a security risk imposed upon the American people that I am unwilling to accept,” Forbes said in a statement.

The debt ceiling agreement undoubtedly puts added pressure on DOD efforts that have been under way for months.

“This pressure comes at a time when [DOD] has had years of growth in real spending, does little or no realistic long-term force planning, cannot control its manpower and procurement costs, and was already seeking cuts in programs between $78 billion and $400 billion,” said Anthony Cordesman, the Arleigh A. Burke chairman of strategy at the Center for Strategic and International Studies think tank, in his latest commentary. “The new legislation layers a whole new set of cuts over the existing cuts forced on the defense secretary in preparing the [fiscal 2012] budget submission, which means massive new short-term pressure to find cuts — any cuts — in defense spending.”

The conservative Heritage Foundation think tank also warned against further cuts to defense spending.

“There are two rounds of defense cuts that risk our national security,” wrote Kim Holmes, vice president of foreign and defense policy at Heritage. “If all are imposed, we will have a trillion dollars less than we need to protect our nation and defend its interests. Engaged in 10 years of war, the armed forces are stretched thin and reaching the breaking point.”

Some say the new legislation will further emphasize efficiency and usher in a new era of accountability — but not without even greater pressure on DOD officials.

“Frankly, this kind of accountability is new to DOD, so I think they’ll find it stressful dealing with the pressures,” said Robert Guerra, partner at federal consulting firm Guerra Kiviat. "Keep in mind that for years, they counted on the ‘Emergency Supplemental’ due to the [war], to hide many sins. Now that the pressure will be brought to bear through specific legislation, it’s 180 degrees from what the extra funding allowed them to hide their mistakes."

The legislation prompts additional transparency concerns: those associated with the flood of lobbying that is expected to accompany the powerful decision-making of the 12-person bipartisan committee.

Transparency advocates have warned about potential damage to public trust because of the behind-closed-doors debt deal discussions in the past few days.

Although Obama and House Speaker John Boehner had touted a goal of providing to the public at least 72 hours advance notice of all pending legislation, that did not happen with the debt agreement package.

“The exceptions to the 72-hour rule are reserved for emergency situations only,” John Wonderlich, policy director at the Sunlight Foundation, an open-government group, wrote in a blog entry Aug. 1. "We’re in an emergency now, but it’s one of our leaders’ own making."

Looking ahead to the next phase, open-government advocates are concerned about the 12-member super committee. Assuming it operates similarly to other congressional joint committees, the panel is almost sure to attract a barrage of attention from lobbyists fighting to maintain their clients’ spending priorities.

“You can bet that a carnival of fundraising and lobbying will accompany their negotiations," Wonderlich wrote in a blog entry Aug. 2. "If this committee isn't transparent, it'll be a failure of public policy, and a black eye on Congress.” 

The legislation does not specify how the joint committee should disclose lobbying or how publicly it would operate other than requiring that its recommendations, first meeting and final vote must be public, Wonderlich said.

He suggested hosting webcasts for all meetings, publishingg recommendations from members of Congress, and publishing notices of all meetings held with lobbyists and other advocacy interests.

Wonderlich also suggested that the super committee’s 12 members step up their reporting of all campaign contributions and fundraisers and publish frequent, real-time disclosures of all campaign financing while they serve on the panel.

“Public confidence in the merit of the committee's decisions depends on there being not even a perceived conflict of interest,” Wonderlich wrote.

Another area expected to be hit hard by the debt ceiling legislation — and also courting plenty of controversy — is health care. Industry advocates are warning that some of the measures, especially cuts to Medicare, could overwhelm an already stressed system.

Although the debt agreement explicitly protects Social Security, Medicaid and Medicare beneficiaries from the initial round of cuts, Medicare payments to hospitals, doctors, nurses and other providers could be vulnerable to as much as 2 percent in additional cuts in the second round of reductions later this year.

Dr. Roland Goertz, president of the American Academy of Family Physicians, said decreasing Medicare payments to doctors further, following other recent Medicare payment cuts, could result in some physicians declining to accept new Medicare patients.

“Extracting billions in savings by reducing Medicare payments to providers will have serious implications for family physicians — whose practices operate on extremely tight margins — and their ability to remain open and provide care for patients,” Goertz said in an Aug. 2 statement.

Rich Umbdenstock, president and CEO of the American Hospital Association, urged the special committee members to protect Medicare payments to hospitals from further reductions.

“Cuts to Medicare funding for hospital care could overload emergency rooms, shut down trauma units and reduce patient access to the latest treatments,” Umbdenstock said in an Aug. 2 statement.

Despite the many ominous predictions the debt ceiling agreement is eliciting, it’s not all bad news. Some organizations have identified areas that could likely be cut without too many adverse effects, and other advocates note that IT could play a transformational role as mandates begin to take hold.

Two watchdog groups identified a major source of cuts in national security spending that most likely would not have a direct effect on troops.

“Chief among these savings is a proposal to reduce our overreliance on service contractors, which cost the Department of Defense, alone, more than $200 billion in the 2010 fiscal year,” Danielle Brian, executive director of the Project on Government Oversight, said Aug. 1.

POGO and Taxpayers for Common Sense said in July that the government could save $300 billion during the next 10 years if DOD reduces spending on service contracts by 15 percent. The government could also save $72 billion in 10 years by reducing civilian agencies’ service contracts by 15 percent.

The groups pointed out that agencies don’t need to spend money on services from companies when federal employees can do it.

Dan Goure, vice president at the Lexington Institute, also noted that although the cuts to DOD will be painful, it could be worse.

“Considering some of the numbers [including those previously proposed in efficiency discussions over the past year], it’s not a bad deal. It will still hurt, but it’s not going to tear [DOD] apart,” Goure said. He also said IT is likely to be safer than other areas of DOD because of its widespread use, though large-scale platforms could remain vulnerable.

“We’re not going to see IT suffer as much as weapons programs or ammunition,” Goure said.

In fact, some of the debt ceiling stipulations could increase IT needs across the federal government.

Roger Waldron, president of the Coalition for Government Procurement, said one result of the debt ceiling debate is a boost in the need for the cloud computing initiative.

Cloud computing is helping agencies to optimize their resources, federal officials have said, by sharing and collaborating in various ways.

Attempts at avoiding costs become much more important now, as officials are told to reduce their operating costs. Waldron said that in light of the circumstances, agencies will be looking closely for areas to cut expenses, and contractors, who can work with officials to point out where cuts might come from, may become more useful to the government.