WASHINGTON: Whoever wins the White House in November will still be hobbled by the spending limits in the Budget Control Act, warned fiscal expert Todd Harrison. Whether BCA goes away, he said, depends much less on whether Trump or Clinton wins, and much more on who controls Congress — above all on whether Reagan defense hawks or Tea Party budget hawks dominate the Republican party.
“The BCA is probably the biggest challenge that the next administration faces, not only for defense,” Harrison said this morning at a press briefing at the Center for Strategic & International Studies. “All the other defense related issues — things about readiness, things about our force posture, things about the modernization bow wave — those all depend on what you do with the Budget Control Act and the budget caps.”
“Whoever the next administration is, they are likely going to want to exceed those caps,” Harrison said. “At the end of the day, whoever’s president, my analysis is it’s not going to make that much of a difference, because they’re still going to be dealing with Congress to get things passed.”
Harrison’s ideal would be a four-year budget deal lifting the caps for the remaining four years the BCA is in force, 2018-2021. His minimum would be workarounds using Overseas Contingency Operations (OCO) funding, which is exempt from the BCA caps. The Pentagon has muddled through the past years by getting both OCO and higher caps; if it gets neither, it’s in big trouble, Harrison said — and only Congress can set funding levels.
Donald Trump
“Whether it’s Clinton or Trump…they’ve got to strike a deal with Congress,” Harrison said. “I think that’s job number one for the new administration.”
“Job No. 1” may also be Mission Impossible. “I’m not optimistic that we’ll see enough of a shift in the makeup of Congress that it will break up the budget stalemate that we’ve had for the past five years,” said Harrison.
“Because a lot of these issues do not fall neatly along partisan lines, it depends on the specific individuals who win these seats, not just their party affiliation,” Harrison told me and a few other reporters after the briefing. “We’re already seeing some changes like Randy Forbes,” the House seapower subcommittee chairman and ardent advocate of bigger defense budgets who lost his primary to an anti-establishment ex-Navy SEAL. “(Senate Armed Services Chairman) John McCain, we’ll see what happens in his primary….That could be a big shock as well.”
Harrison expects gridlock to continue in the next Congress. It’s “likely” Republicans keep the House, he said, and “even if Democrats take the Senate, they’re not going to have sixty votes in the Senate. You’re still going to have divided control, one way or the other, and so you’re got to negotiate the compromise, and it’s the same budget stalemate we’ve been in for five years now.”
Three budget deals to lift BCA caps, and Overseas Contingency Operations (OCO) spending exempt from camps, have softened the impact of the Budget Control Act. (Todd Harrison graphic)
“All along this debate about the defense budget hasn’t really been about defense. It’s been about the non-defense side of the budget, it’s been about mandatory spending, entitlement programs, and it’s been about taxes,” Harrison said. “Both sides say they want to increase the defense side of the caps. Republicans only want to do that and they want to pay for it with cuts elsewhere in the budget; Democrats want to increase the caps on both sides; so how do you split the difference?”
Todd Harrison
“The way this worked in the past three budget deals, it’s been equal increases on the defense and non-defense sides of the budget caps, but not getting rid of the budget caps entirely,” Harrison noted. “The Democrats can go back to their base and say, ‘look, we got an increase in domestic spending.’…Republicans can say, ‘we got more defense funding, and we kept the caps in place so we’ve got fiscal discipline.’”
Timing matters as much as content: “All of these deals have happened until the last possible moment,” Harrison said, so the lesson for Trump or Clinton is “wait until Congress’s back is against the wall.”
Clinton seems pretty committed to the Democratic consensus that there should be no increase in defense caps without equal, dollar-for-dollar relief for domestic programs. Trump, however, is a wild card.
“Quite frankly we don’t know enough about Trump’s defense plans; we haven’t heard that many specifics,” Harrison told me after the briefing. “We hear things like we’re going to have a stronger military, and then we hear him say things like, aircraft carriers…cost us a million dollars every time we ‘turn them on’ — I don’t really know what that means — and we hear Trump making statements about reducing our overseas presence, bringing more of our troops home, reducing our security commitments to our NATO allies, our Asia-Pacific allies, to our Middle East allies…. Okay, if you’re actually going to do those things, you could have a much smaller military.”