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FY2017 DoD budget request totals $582.7 billion

Wednesday, February 10th, 2016

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The FY2017 Department of Defense (DoD) base budget request is $523.9 billion for discretionary budget authority, $2.2 billion more than the amount enacted for FY2016 ($521.7 billion).

The budget request also includes $58.8 billion for Overseas Contingency Operations (OCO), essentially the same amount enacted for FY2016. ($58.6 billion).

DoD’s five-year budget plan FYDP) for FY2017 to FY2021 is $2.8 trillion, $18.5 billion less than planned in the FY2016 FYDP. The FY2017 budget is $23.4 billion less than planned last year, but budgets for FY2018 through FY2021 are $4.9 billion higher. The cut to FY2017 was made primarily through a combination of fuel and inflation savings (-$5 billion) and program changes (over -$11 billion).

DoD’s press statement stressed that the budget “complies with the Bipartisan Budget Agreement of 2015, giving the department both funding stability and protection from the damage of sequestration in FY2016 and FY2017.” The FY2017 budget request “reflects the priorities necessary for our force today and in the future to best serve and protect our nation in a rapidly changing security environment,” according to the statement.

DoD’s budget overview identifies six key themes of the FY2017 DoD budget Seek a balanced force; Manage enduring readiness challenges; Accelerate the pace of defense reform; Pursue investments in military capabilities; Take care of people; and Support Overseas Contingency Operations.

The Army’s FY2017 base budget request totals $123.0 billion (23.5% of the total DoD base budget) down $0.3 billion from the FY2016 enacted level. The Navy’s budget (including the Marine Corps) totals $155.4 billion (29.7%), $3.9 billion lower than FY2016.  The Air Force base budget request is $151.1 billion (28.8%), up $5.4 billion. The budget request for Defense-wide accounts (including the Defense Health Program) is $94.5 billion (18.0%), $1.1 billion higher than the previous year.

Total active forces end strength will decline by 9,000 across the FYDP, from 1,281,900 in FY2017 to 1,272,100 by 2021. The Army will lower its active end strength level from 460,000 in 2017 to 450,000 by 2021. The active Marine Corps force will remain constant at 182,000 as will the active Air Force at 317,000. The Navy active force will increase slightly from 322,900 in FY2017 to 323,100 in FY2021. Total Guard and reserve end strength will decline only marginally decline from 801,200 in FY2017 to 801,100 in FY2021.

The FY2017 budget would raise military pay by 1.6 percent. The president's budget also proposes a 1.6 percent pay raise for civilians. The 2016 pay raise was 1.3 percent.

The budget makes no changes to TRICARE for active duty personnel. The administration proposes an annual enrollment fee for TRICARE-for-Life coverage for Medicare-eligible retirees (not-medically retired) and their families. Some copays would increase, but there would be no copays for treatment in Military Treatment Facilities (MTFs).

The FY2017 budget provides significant funding for major modernization programs. The budget funds 63 F-35 aircraft for Air Force, Marine Corps, and Navy, 15 KC-46 Tanker Replacement aircraft for the Air Force, and 52 AH-64 Apache and 36 Blackhawk helicopters for the Army. The Navy will buy seven ships, including two Virginia Class submarines, two DDG-51 Aegis destroyers, two Littoral Combat Ships (LCS), and one Amphibious Assault ship. The budget also funds the procurement of five EELV Launch Vehicles. The Air Force rephases its schedule for retiring the A-10 aircraft, retaining the A-10 aircraft force through 2022.

However, in order to meet budgetary targets, DoD cut planned weapons buying in FY2017. The Army is buying nine fewer Apache and 24 fewer Blackhawk helicopters than previously planned. Five fewer F-35 aircraft, three C-130J aircraft, four less LCAC Service Life Extension Programs, and 77 Joint Light Tactical Vehicles for the Marine Corps will be bought in FY2017.

Investment in cyber warfare and security will be $7 billion in FY2017 and $35 billion over five years. This funding will support DoD's main cyber missions: defend DoD networks, systems, and information; defend against cyber attacks that have a “significant consequence;” and provide cyber support to operational plans. The budget also continues funding support for Science and Technology (S&T)–$12.5 billion in FY2017 and $65 billion across the FYDP–to “develop capabilities that advance the technical superiority of the U.S. Military to counter new and emerging threats.”

The FY2017 budget also includes department-wide savings and reform proposals. The administration renews its request for approval to initiate a new round of Base Realignment and Closure (BRAC), this time in FY2019. Congress has repeatedly rejected another BRAC round due to concerns that DoD has not demonstrated significant net savings. Other reform proposals include a 25 percent cut in headquarters costs (from the 2014 level) by 2020, continuing efforts department-wide to become audit ready by 2018, improving business practices in the commissary system, and continuing defense acquisition reform through the implementation of Better Buying Power initiatives.

Details (including Military Service briefings) on the FY2017 DoD budget request is available on the DoD Comptroller website.  

FY2017 federal budget will be released February 9

Friday, February 5th, 2016

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President Obama will release the FY2017 federal budget to the public and Congress on Tuesday February 9, 2017. This is one week later than the usual date for submission of the budget, which is the first Monday in February.

After the FY2017 budget is released senior administration officials will brief the press and begin testifying before congressional oversight committees.

This year, contrary to what has become usual practice, the House and Senate Budget Committees will not receive testimony from the Director of the Office of Management and Budget (OMB) on an overview of the president's budget request, Senate Budget Committee Chairman Sen. Mike Enzi (R-WY) and House Budget Committee Chairman Tom Price (R-GA) issued a joint press release announcing that the committees will not hold hearings on an OMB review of the president's FY2017 budget.

Sen. Enzi said rather than hear from the administration on the FY2017 budget,the committees “should focus on how to reform America’s broken budget process and restore the trust of hardworking taxpayers.”  

The House and Senate Armed Services Committees have not yet announced when they will receive testimony from the Secretary of Defense and Chairman of the Joint Chiefs of Staff on the FY2017 Department of Defense (DoD) budget.

Next week, Highlights will include a brief overview of the FY2017 DoD budget request and identify links to official statements and available budget material.

Carter outlines the FY2017 DoD budget request

Tuesday, February 2nd, 2016

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The FY2017 Department of Defense (DoD) budget will total $582.7 billion DoD Secretary Ash Carter revealed in a speech to the Economic Club in Washington, DC today.

This amount is consistent with the budget agreement signed in December. Carter said the funds provided in this agreement allow DoD “to focus on the shape, making choices and trade-offs to adjust to a new, strategic era, and to seize opportunities for the future.”

Carter indicated that the budget request will begin to show that DoD is taking a longer view of countering security threats. “Even as we fight today's fights, we must also be prepared for the the fights that might come 10, 20 or 30 years down the road,” he said.

The secretary identified the challenges that underpin the key decisions that he and the senior civilian and military leaders made in developing this budget plan: Russian aggression in Europe; China's rise in the Asia Pacific region; security concerns caused by North Korea and Iran; and continuing fight against ISIL (Islamic State of Iraq and the Levant) and other forms of terrorism. Carter said addressing these challenges requires “some new thinking on our part, new posture in some regions and also new and enhanced capabilities.”

Carter said the FY2017 budget will include $7.5 billion more than than last year for new investments to fight the war against ISIL, 50 percent more than last year. Citing other related investments Carter said the budget would include over 35,00 GPS-guided smart bombs and laser-guided Rockets He also said the Air Force would defer the final retirement of the A-10 aircraft (being used extensively in action against ISIL) until 2022. Congress has been highly critical of the proposal to retire the A-10, stopping it's retirement in the past.

The budget will support additional U.S. Forces in Europe and training with U.S. Allies under the European Reassurance Initiative by increasing funding to $3.4 billion in FY2017.

Research and development funding in FY2017 will total $71.4 billion, according to Carter, to fund an enhanced effort to advance and field new capabilities.

Investments in strategic capabilities highlighted by Carter include technologies being developed in the Strategic Capabilities Office (SCO). These efforts will “reimagine exiting DoD, intelligence community and commercial systems by giving them new roles and game-changing capabilities.” SCO funded capabilities will include: advanced navigation (e.g., microcameras and sensors); swarming autonomous vehicles (e.g. microdrones); self-driving networked boats; gun-based missile defense; and an arsenal plane (to be a launch pad for conventional payloads).

FY2017 funding for submarine capabilities will total $8.1 billion and total over $40 billion over five years. Investment in cyber warfare and security will be $7 billion in FY2017 and $35 billion over five years, to “improve DoD's network defenses…build more training ranges… and develop cyber tools and infrastructure to provide offensive options,” Cater said. He also stressed that the FY2017 budget will contain more funding than the $5 billion in last year's budget to enhance the “ability to identify, attribute and negate all threatening action in space.”

On making tradeoffs to fund additional submarines and planes Carter said DoD tried to protect modernization and readiness posture. One tradeoff Carter mentioned was buying only as many Littoral Combat Ships (LCS) needed, Carter said.

Carter also said the budget continues acquisition reform, reduces overhead to allow DoD to reallocate $8 billion over the next 5 years to higher priorities, and pursues organizational reforms.

Full details of the FY2017 federal budget will be released by the president on Tuesday, February 9.

CBO projects budget deficit will increase by $105 billion in FY2016

Saturday, January 30th, 2016

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The Congressional Budget Office (CBO) projects the 2016 ”baseline” federal budget deficit will be $544 billion, $105 billion higher than in 2015 ($439 billion). If this 2016 deficit projection is achieved, it would mark the first increase in the deficit since 2009.

The deficit projection is somewhat misleading, however, as $43 billion of the deficit results from a timing quirk. Because October 1, 2017, the first day of FY2017, falls on a Sunday, some government payments normally to be made in FY2017 are expected to happen in FY2016, thus increasing the FY2016 deficit while lowering the 2017 deficit.

The projected $105 billion increase in the 2016 deficit results as a four percent increase in estimated revenue (+$127 billion), which is more than offset by a projected six percent (+$232 billion) rise in outlays.

Higher revenue projections come from continuing growth in the economy leading to rising incomes. Revenues from individual income tax payments (up $80 billion or five percent) will rise as incomes increase. However, corporate income tax revenue is expected to decline by five percent (-$17 billion) because the FY2016 Consolidated Appropriations Act extended expired tax provisions and made the extension retroactive to the beginning of 2015. Other revenues (including payroll taxes) are projected to increase by $64 billion.

CBO projections show that total federal outlays should be $3.919 trillion, up $$232 billion from the pervious year ($3.687 trillion).Total mandatory spending in 2016 ($2.466 trillion) is up $167 billion, accounting for more than 70 percent of the total spending increase. Social Security outlays will rise $28 billion (Social Security recipients will receive no cost of living increase in 2916), while total net outlays for Medicare, Medicaid, the Children;s Health Insurance Program, and health insurance premium subsidies are expected to increase by $104 billion.

CBO expects total discretionary outlays will be $1.198 trillion in 2016, up $32 billion, as the Bipartisan Budget Act raised statutory limits on both defense and nondefense discretionary spending.

Net interest payments will rise by $32 billion in FY2016, according to CBO. The rise is attributed to the continuing increase in the national debt and projected rising interest rates.

The CBO report also includes deficit estimates for 2016 through 2026.  These estimates show baseline deficits increasing slightly through 2018 to $572 billion and then increasing at a faster annual pace reaching $1.366 trillion in 2026. assuming no changes to current law.

Underlying CBO’s baseline deficit projections are economic assumptions that expect the economy to grow by about 2.5 percent in real terms for the next few years, but then fall back to an annual average real growth of 2 percent from 2018 through 2026. The slower growth in the outyears results from slowing in the supply of labor.

CBO expects the annual unemployment rate to drop to 4.5 percent in 2016 and hold that rate for a few years. However, the rate is then expected to rise to an average of 5 percent through 2026. CBO projects the rate of inflation (as measured by the change in the Consumer Price Index–CPI) to stay below 2 percent until 2017 when it will rise to 2.4 percent. The CPI is expected to average that level through 2026.

OPM moves to reform government’s background check procedures

Tuesday, January 26th, 2016

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Last week, the Office of Personnel Management (OPM) announced changes designed to “modernize and strengthen” procedures for conducting background checks for federal employee and contractors and for protecting sensitive material.

The new procedures result from a interagency review directed last year in response to increasing cybersecurity threats. The review was undertaken to “re-examine reforms to the Federal background investigations process, assess additional enhancements to further secure information networks and systems, and determine improvements that could be made o the way Government conducts background investigations,” according to the Directors Blog posted on the OPM website.

Under the actions announced by OPM the government will establish a new organization to to performs background investigations, assign responsibility for information technology (IT) security to the Department of Defense (DoD), and clarify governance authorities, roles, and responsibilities.

A new entity, the National Background Investigation Bureau (NBIB), will absorb the existing Federal Investigative Service (FIS) and be the sole provider of government-wide background investigations. The new bureau will report to the OPM Director. The NBIB head will be appointed by the president and the bureau will be headquartered in Washington, DC.

DoD will design, build, secure, and operate NBIB's IT systems. The administration wants to “leverage DoD's significant national security, IT, and cybersecurity expertise, incorporating security into the fundamental design of the systems, strengthening the security of the data environment, and providing robust privacy protections.” According to OPM, the FY21017 budget will include an additional $95 to develop IT capabilities for this effort. Also, the Performance Accountability Council (PAC), chaired by the Office of Management and Budget (OMB), will establish an interagency cybersecurity advisory group to advise it on system development and threat mitigation.

The administration will clarify the roles of the players in the new bureau and assign new responsibilities, and issue new guidance where appropriate.

These actions are part of the administration's plan to improve the security clearance system that includes: a five-year reinvestigation requirement for all individuals with a security clearance; reducing active security clearances by 17 percent; and recommendations to enhance information sharing between State, Local, and Federal Law enforcement Agencies. 

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