Pentagon ‘Cuts’ Spending: From $495 Billion to $534 Billion

January 10th, 2015 - by admin

Tony Capaccio / Bloomberg & Jason Ditz / – 2015-01-10 01:34:20

Pentagon Wants another $51 Billion:
Pentagon Seeking 20% Cut in US War Funding to $51 Billion

Tony Capaccio / Bloomberg

(January 8, 2015) — The Pentagon will request about $51 billion in war funding for the fiscal year starting Oct. 1, a 20 percent reduction from the $64 billion Congress approved this year and the least since the Sept. 11 terrorist attacks, officials and congressional aides said.

The Overseas Contingency Operations funding, as it’s known, will be sent to Congress in addition to basic defense spending of about $534 billion when President Barack Obama offers his proposed fiscal 2016 federal budget on Feb. 2, according to the officials and aides, who asked not to be identified before the details are made public.

While the decline in war funding largely reflects the continued withdrawal of US troops from Afghanistan — from the 10,600 now there to half that planned by year-end — it remains enough to draw questions about why the Defense Department shouldn’t pay to fight wars as part of its basic mission.

“The continuing drawdown in Afghanistan is not having a proportionate effect on” the war budget because it’s “being used for a lot of things other than Afghanistan,” said Todd Harrison, a defense budget analyst with the nonpartisan Center for Strategic and Budgetary Assessments in Washington.

“It’s a budgetary shell game for getting around” the caps imposed by the automatic spending cuts known as sequestration, Harrison said in an e-mail.

Defense Stocks
News of the planned decrease in war spending damped today’s gains for defense stocks. After rising as much as 3.2 percent, Lockheed Martin Corp. (LMT) pared its advance to 2.3 percent, at $195.15 at 2:14 p.m. in New York. Northrop Grumman Corp. climbed 2 percent to $151.63, retreating from a jump of as much as 3 percent earlier.

The shares have proved resilient in the face of Defense Department spending cutbacks. A Bloomberg Intelligence gauge of the four largest Pentagon contractors — excluding Boeing Co., whose civilian airplanes business is larger than its military unit — surged 30 percent in 2014, outstripping the 11 percent increase for the Standard & Poor’s 500 Index.

Exceeding Cap
Sequestration cuts are scheduled to resume again in fiscal 2016, after a two-year break, unless Congress overturns them. Obama’s base defense budget for the coming year assumes about $34 billion more than the cap would permit.

Money requested for Overseas Contingency Operations is exempt from sequestration.

The $51 billion request would be for military operations and doesn’t include money from the fund that goes to the State Department and Department of Veterans Affairs. The previous low was $17 billion in fiscal 2002, the second year of war funding.

Over the years, the Pentagon and Congress have added items less directly related to waging war, even as each chastises the other over the practice.

“The use of war funding expanded to cover issues with only tenuous links to combat operations,” Emil Maine and Diem Salmon wrote in an essay on the website of the Heritage Foundation, a Washington-based policy group. They said the fund shouldn’t be used as “a safety valve to cover defense spending shortfalls” and should be phased out.

2008 Peak
The most war spending was in fiscal 2008 when Congress approved $187 billion, largely to fund the Bush administration’s Iraq surge that swelled troops to a peak of 165,000 in November 2007. They fell to 148,000 in July 2008.

Navy Commander William Urban, a Defense Department budget spokesman, declined to comment directly on the upcoming request.

Future requests “will be based on actual contingency operations” so it’s “impossible to predict” whether the current downward trend in war spending will continue, he said.

This year’s war-spending request initially was $58.6 billion. It grew to about $64 billion with the addition of $5 billion requested in late November.

Those funds will be used to retrain and equip the Iraqi army to attack Islamic State extremists and to provide a counterterrorism fund for allies as well as the European Reassurance Initiative after Russia annexed Crimea and supported Ukrainian separatists with military forces.

The 2016 request is likely to include additional funds to pay for flying hours and munitions dropped in anti-Islamic State airstrikes.

To contact the reporter on this story: Tony Capaccio in Washington at

Pentagon Shutters Bases,
But ‘Savings’ Dwarf Planned Spending Growth

Jason Ditz /

(January 8, 2015) — The Pentagon has announced plans to consolidate its military forces in Europe, transitioning out of 15 bases, and saving some $500 million annually. At the same time, they announced plans to reduce their emergency war funding from its current $67 billion to $51 billion in 2016.

Both moves are being made in the context of sequestration, albeit in both cases far short of the cuts that are actually mandated by sequestration itself. Still, it’s a start, right?

Not really. The $16.5 billion savings are a small fraction of the planned baseline increase in military spending, from $495 billion to $534 billion. Even if the Overseas Contingency Operation (OCO) actually stays reduced by 20%, overall military spending will be up markedly.

And the OCO cuts probably won’t stay, Congress almost always gives the Pentagon even more than it requests, as various Congressmen cram extra spending into different programs that benefit key donors, even if the Pentagon doesn’t actually need or want those programs.

With the ISIS war still escalating at an alarming rate, there’s no telling how big it will even be by FY2016, but however big it is, expect Congress to be at the ready with emergency expenditures, whether within the OCO or in other of its myriad spending bills, ratcheting up spending all the more.

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