Congress Continues to Nibble Around the Edges of Defense Spending

by: Matthew Potter
June 29, 2011

Category: Editorial | RSS 2.0

The FY12 budget for the U.S. Defense Department continues its long process through Congress. The Senate Armed Services Committee (SASC) released its mark up this week. It is one of the four committees between the two parts of the legislature with this responsibility. As the House committees have already done they made some small cuts in the budget.

The Committee’s mark up removed less then one percent of the $671 billion requested by the Obama administration or $6.4 billion. Most of this was achieved by holding Operations & Maintenance (O&M) spending at FY10 levels and removing a billion from the Department’s construction budget.

The House had made smaller cuts of less the half a billion in their mark ups but had focused on reducing the funds for use in Afghanistan and Iraq. These saw a major cut overall with a planned amount of less the $120 billion compared to the $130 billion in the last proper budget passed in FY10.

The SASC bill does contain some controversial provisions including those dealing with the next F-35 production buy from Lockheed Martin (LMT). The committee is dictating the type of contract required and the cost sharing if their are any increases over the target price for the aircraft. If that provision stands after the conference with the House it would mean Lockheed would be liable for any overruns past the target while right now the government is responsible for up to the first twenty percent.

The Senate does, unlike the House, end funding for the JSF’s second engine program. The Obama administration had requested terminating this and the SASC agreed. Rolls-Royce (RR) and GE (GE) continue to develop this out of their own funds for now hoping that Congress will continue funding it. The House did but now the Senate did not so another item to be worked out in the conference committee.

While these cuts seem rather small they do indicate a sea change in the process. Up to this year the Defense Department’s budget grew. Much of this was due to the fighting in Iraq and Afghanistan. Now it is being reduced. Programs are being prioritized and some are even eliminated. The next few years will see continuations of these trends as the U.S. tries to get a handle on its spending. Bigger reductions are going to come and they may be closer to ten percent or more and not 1 percent.

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