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2014 Defense Budget: What's New?
Posted By: Michael Tasselmyer - 04/11/13

Sixty-five days past due, the President has released his Fiscal Year 2014 budget request. The National Taxpayers Union Foundation analyzed the data, and posted some of our findings here. We found a lot of overlap between the President's previous proposals and his "new" ones he submitted Wednesday morning. In addition, it assumes historic levels of tax revenue -- which rely on rather optimistic economic projections -- to pay the bills.

The same can be said of the Department of Defense (DoD) budget. Earlier this week I posted a run-down of some of the proposals we were likely to see in the DoD budget. Now that the official budget is out, let's take a closer look.

The President is pushing for a return to pre-sequester spending levels. The DoD budget requests $526.6 billion in discretionary spending. The problem? That's more than $52 billion more than it's actually allowed to spend under the provisions of the Budget Control Act (BCA). It may be just a political move, but unless the President can strike a deal that turns back the BCA spending limit, he'll have to find a way to work with the $475 billion he's slated to get instead.

Some feasible savings proposals are mixed with more weapons spending. The President has proposed halting the Army's Ground Combat Vehicle (GCV) program, and has suggested further rounds of base re-alignment and closures (BRAC). The BRAC program wouldn't begin until at least 2016, in order to give local economies a chance to prepare for the upfront costs. However, it would consolidate excess materials and facilities that DoD has itself acknowledged are unnecessary: in 2005 it was determined that as much as 24 percent of DoD facilities were not needed. Closing those facilities could offer significant long-term savings for taxpayers. As far as the GCV program is concerned, CBO has determined that retaining current units would save over $24 billion with "essentially no programmatic risk" to the service.

Speaking of weapons technology funding, the President opted to continue subsidizing the F-35 fighter jet development and procurement program to the tune of $8.4 billion. Just before the sequester deadline earlier this year, NTU's Nan Swift opined on some of the controversy surrounding the program. Additionally, the budget includes $5.4 billion for nuclear attack submarines, $4.7 billion for "cyber operations," and $1.7 billion for a new air-craft carrier.

Some "savings" -- in exchange for more spending elsewhere. In keeping with last year's practice, the President counts "reductions in Overseas Contingency Operations" as an offset to additional infrastructure spending. However, those reductions -- $167 billion through 2019 -- have already been going on for some time now, as U.S. combat force involvement in areas like Iraq and Afghanistan gradually winds down.

Veterans' benefits programs are growing rapidly. The number of people receiving benefits under many entitlement programs, including veterans' health and pension programs, is expected to grow significantly over the next decade. In Table 26-4 of the budget's Analytical Perspectives section, we can see that beneficiaries for "veterans' compensation" programs are expected to increase by 1.7 million, or 45 percent, by 2023. That's the fastest rate of growth for any program except Medicare's prescription drug plans, and could spark debate on how to handle the additional financial obligations.

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Obama's 2014 Budget Preview: The Pentagon
Posted By: Michael Tasselmyer - 04/09/13

On the eve of the President's Fiscal Year 2014 budget request, recently confirmed Secretary of Defense Chuck Hagel is warning Pentagon officials to prepare for significant cuts to military and defense programs, while President Obama is likely to push for a return to pre-sequestration funding levels.

While the specifics remain to be seen, it appears that some of the programs on the chopping block include missile defense systems, base closures, and weapons acquisition costs.

According to Bloomberg News, the Pentagon will request $9.16 billion in funding for missile defense systems in 2014, down roughly $550 million from last year's $9.71 billion request. That decrease, while not small on its own, represents just 0.1 percent of the anticipated total Department of Defense (DoD) budget request of $526.6 billion.

A major contributor to DoD budgetary growth is the cost of acquiring new high-tech weapons systems. A March 2013 Government Accountability Office (GAO) report showed that 86 major defense acquisition programs identified in 2012 are projected to cost over $1.6 trillion. Of those programs, the 10 most expensive alone accounted for 65 percent of the total required acquisition and development spending.

GAO has also shown that the DoD could stand to acquire weapons systems and award defense program contracts on a more competitive basis. According to the above-mentioned report: "Only 17 of the 40 (43 percent) current major defense acquisition programs and 7 of the 17 (41 percent) future programs we assessed reported that they have acquisition strategies that call for the use of competition throughout product development... ." Another GAO report from March 2013 indicates that competition for the $359 billion in contracts that DoD awarded last year is lower than it has been in five years, even though "[c]ompetition is the cornerstone of a sound acquisition process and a critical tool for achieving the best return on investment for taxpayers."

Of course, weapons systems costs are only part of the story when it comes to defense and military funding issues. A significant portion of defense-related funding goes towards veterans' health benefits and the human costs associated with maintaining a military force.

Early reports suggest the Veterans Affairs budget will request a discretionary budget of $63.5 billion, 4 percent higher than what President Obama approved last month. In light of a backlog in benefits claims, the VA budget will include a request to quadruple the funding for a paperless claims system, totaling $155 million. Mental health services designed to help veterans facing post-traumatic stress could increase by as much as $7 billion (7 percent above enacted 2013 funding).

Whatever specific funding the President requests for the Department of Defense in his new budget, it's clear that if the recent sequestration spending cuts remain in place, he will have to significantly rethink the DoD's funding going forward. The CBO has estimated that the DoD will have to cut about $74 billion per year to comply with the spending caps. That could prove difficult for DoD, an agency that consistently appears on GAO's "High Risk" list and which "is one of the few federal entities that cannot accurately account for its spending or assets."

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Defense Spending Cuts: Take Your Pick
Posted By: Michael Tasselmyer - 03/21/13

In the wake of the sequester, there's been a lot of talk in Washington about the effect that automatic spending caps could have on the Department of Defense's budget. Specifically, some legislators and government officials are unsure of how to cut costs without undermining national security interests.

The Congressional Budget Office (CBO) released a report on Monday that may provide some answers. In "Approaches for Scaling Back the Defense Department's Budget Plans," CBO analyzed the projected future costs of the DoD's current plans relative to the sequestration requirements.

dod budget vs cbo

As the graph above illustrates, the costs of DoD's future plans are still well above what's actually permitted under the Budget Control Act -- the Department would have to reduce its annual budget by about $74 billion per year to meet the requirements. CBO's cost estimates are higher than DoD's own, primarily because CBO is less certain of the Department’s ability to contain costs associated with veterans' health benefits, military and civilian compensation, and weapons acquisition.

CBO looked at four broad policy measures that the Department could implement in order to lower its costs and meet the new budgetary requirements.

  • Option 1: Preserve Force Structure; Cut Acquisition and Operations. In this scenario, the size of the U.S. military force would remain the same, but funding for weapons acquisition and operations would be cut, starting at 13% in 2013.
  • Option 2: Cut Acquisitions and Operations; Phase in Reductions in Force Structure. This option would achieve half its savings by cutting acquisition and operation costs. The other half of the cuts would occur after 2017, by gradually reducing the size of U.S. military forces and shifting active units to reserves.
  • Option 3: Achieve Savings Primarily by Cutting Force Structure. As suggested by its title, option 3 would cut the size of some military forces by twice as much as option 2.
  • Option 4: Reduce Force Structure Under a Modified Set of Budget Caps. This option would adjust the timing and amount of automatic spending cuts so that they are phased in more slowly. It would require about the same total reduction of U.S. military forces as under option 3, but the bulk of the cuts would occur in later years.

cbo cut options

Important to note is that the study is not meant to draw any conclusions on military strategy; the paper simply focuses on fiscal issues associated with the DoD's future plans. In CBO's own words:

"The effect of such reductions on national security is beyond the scope of this paper. Although these options would represent a significant scaling back of DoD's plans, U.S. military forces have substantial technological and operational advantages over those of other nations today. Therefore, policymakers may find it acceptable for the United States to reduce the size of its military as a decade of overseas conflicts draws to a close. … Even at their deepest in 2014, the cuts from the BCA will return DoD’s budget to where it stood in real terms in 2006, still 25 percent above the department’s funding in 2000."
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CPAC 2013, Part 1 (AUDIO): Chris Preble, Travis Brown, Matthew Vadum, Kelly Jemison - Speaking of Taxpayers
Posted By:  - 03/19/13

Subscribe to our podcast "Speaking of Taxpayers" via iTunes!

      
   
   
   
   
   

Recorded on the floor of the 2013 Conservative Political Action Conference (CPAC), part one of this episode features Chris Preble of the Cato Institute on defense spending, Travis Brown, author of "How Money Walks", Matthew Vadum of the Capital Research Center, and Kelly Jemison of Students for Liberty! Email the show at studios@ntu.org or tweet us @NTU!

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As Sequester Nears, Cutting F-35 Is a Great Place to Start
Posted By: Nan Swift - 02/26/13

Just in time for Friday’s sequester deadline, the F-35 fighter jet is back in the news to remind us that yes, Virginia, there is room to pare back the Pentagon budget. Last week’s grounding of the entire fleet, due to a cracked engine blade, was the second time in two months that flight operations have been suspended and was well-timed with a major Time Magazine article lambasting “the most expensive weapon ever built.”  While NTU has long voiced concerns over several aspects of the extremely costly and extremely troubled aircraft, it’s about time others start to take notice of how the Pentagon is wasting taxpayer funds on this  boondoggle.

Born out of the Joint Strike Fighter program in the late nineties, Time explains that over the past decade the F-35’s price tag has doubled to $396 billion, the program has been beset with one delay after another, and still:

Its pilots' helmets are plagued with problems, it hasn't yet dropped or fired weapons, and the software it requires to go to war remains on the drawing board.

The article goes on to describe how taxpayer funds have been abused and wasted at almost every step of the way:

It opted to build three versions of a single plane averaging $160 million each (challenge No. 1), agreed that the planes should be able to perform multiple missions (challenge No. 2), then started rolling them off the assembly line while the blueprints were still in flux--more than a decade before critical developmental testing was finished (challenge No. 3). The military has already spent $373 million to fix planes already bought; the ultimate repair bill for imperfect planes has been estimated at close to $8 billion.

Back in 2002, Edward Aldridge, then the Pentagon's top weapons buyer, said the F-35 was ‘setting new standards for technological advances’ and ‘rewriting the books on acquisition and business practices.’ His successor voiced a different opinion last year. ‘This will make a headline if I say it, but I'm going to say it anyway,’ Frank Kendall said. ‘Putting the F-35 into production years before the first test flight was acquisition malpractice. It should not have been done.’

The Pentagon and its allies say the need for the F-35 was so dire that the plane had to be built as it was being designed. (More than a decade into its development, blueprints are changing about 10 times a day, seven days a week.)

It would be easy to think that after so many years and so much money taxpayers will have a truly cutting-edge weapon at the end of the day. Unfortunately, that couldn’t be further from the truth:

Aviation Week & Space Technology magazine, the bible of the aerospace industry and a traditional supporter, published an editorial last fall that declared the program ‘already a failure’ on cost and schedule and said ‘the jury is still out’ on its capabilities.

J. Michael Gilmore, Christie's successor as the Pentagon's top weapons tester, reported in January that all three versions will be slower and less maneuverable than projected. Weight-saving efforts have made the plane 25% more vulnerable to fire. Only one of three F-35s flown by the U.S. military, he added, was ready to fly between March and October.

Read the whole thing here.

The increasing costs of the F-35 are even starting to give our allies second thoughts regarding their planned purchases of the jet. Recently, Canada announced it was reviewing plans to buy 65 F-35s – both due to the cost and potential refueling problems with the aircraft itself. Australia and Great Britain are also reconsidering their orders, while Italy has gone ahead with cuts.

So how did taxpayers get stuck with this high-tech albatross that is seven years behind schedule and 70 percent over initial cost estimates?  Bloomberg.com sums this up:

It is also the defense project too big to kill. The F-35 funnels business to a global network of contractors that includes Northrop Grumman Corp. (NOC) and Kongsberg Gruppen ASA of Norway. It counts 1,300 suppliers in 45 states supporting 133,000 jobs -- and more in nine other countries, according to Lockheed. The F-35 is an example of how large weapons programs can plow ahead amid questions about their strategic necessity and their failure to arrive on time and on budget.

Only a few years ago, taxpayers were asked to bail out private institutions because they were “too big to fail.” Now, even as we face record debt and politicians crisscross the nation wringing their hands over a mere 2.4 percent pullback in total expenditures that they are certain will doom us all, taxpayers are being  forced to continue footing the bill for “too big to kill.”

Buying into the sunken-cost fallacy – throwing good money after bad – is not a path to sound policy, or  a strong defense for that matter. Billions of dollars have been wasted that could have been allocated to other successful military programs, to modernization, or even to finally auditing the Pentagon (a small investment of taxpayer money that could yield big returns).

Sadly, it looks like the F-35 will continue to be with us for now:

But thanks to $4.8 billion in Pentagon contracts for 31 planes pushed out the door barely 100 hours before the original Jan. 2 sequestration deadline, much of the program will continue on autopilot.

But it does help make the point that as the “dreaded” sequester looms Pentagon spending should be on the table, because there’s plenty of room for savings.  The Cato Institute has an excellent graphic here that helps to put the sequester in perspective, explaining that the coming cuts will only take us back to 2006 defense spending levels, which is still more than $100 billion over what we were spending during the Cold War. And while the sequester does call for some immediate short-term cuts in spending, military expenditures are projected to continue rising, albeit not as quickly, as we go forward.

That fact, more than the small chunk of spending restraint taxpayers get from the sequester, should strike fear in your wallet. The sequester is an important first step, but without other tough decisions and serious reforms, we still have an out-of-control spending situation on our hands. At the end of the day, as NTU Taxpayers’ Friend Award winner Congressman Justin Amash (R-MI) stated, “We’re bankrupting our country, and it’s going to put us in danger.”

 

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The Late Edition: February 26, 2013
Posted By:  - 02/26/13

Today’s Taxpayer News!

NTU sheds light on the so-called “Marketplace Fairness Act”, in this letter by the New Hampshire Liberty Party co-founder and co-chairman,

Darryl W. Perry. Before Its News has the full letter.

How will sequestration affect our ability to defend ourselves as a nation? The Cato Institute has published a very informative graphic

demonstrating just how modest a reduction in spending the sequester calls for.

CATO

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NTU and Foundation Poll Youth Conference for Their Important Issues
Posted By: Dan Barrett - 02/21/13

Staff from the National Taxpayers Union and NTU's research and education arm, NTU Foundation, participated in the 2013 International Students for Liberty Conference (ISFLC) with one question for attendees: What policies will you fight for? Over the course of the weekend, students and young adults responded by voting for one of six issues that we thought Americans of all ages could at least agree needs addressing. Many attendees were interested in the mission of NTU and NTUF and asked us many, often challenging questions. I recall one conversation about the economic and realistic reasoning behind whether or not to establish a federal Balanced Budget Amendment. Some even took up the cause of lower taxes and less government by becoming members of NTU or saying that they would enjoy the opportunity to intern with us over the summer. If you’re interested, check out our Internship page. We accept interns year-round and there’s a lot of government to roll back. Still others were looking to show their support for NTU and Foundation in other ways:

Blogger and Vlogger Julie Borowski stopped by for a bumper sticker and a picture

We asked people to cast a vote for their number one issue that needs reform right now. Our six fishbowls highlighted some of the issues we thought the ISFLC participants would identify with the most. The issues were: a Balanced Budget Amendment, cutting the Pentagon budget, ending the Federal Reserve, less spending, real tax reform, and right to work. One lucky entry would be drawn to be interviewed on NTU's Speaking of Taxpayers podcast. The Results were interesting:

Issues Voted on by Participants at
the 2013 International Students for Liberty Conference
Issue
Percentage of Overall Votes
Balanced Budget Amendment
13%
Cut the Pentagon Budget
7%
End the Fed
33%
Less Overall Spending
19%
Real Tax Reform
8%
Right to Work
6%
Other
14%
Note: Not necessarily representative of all ISFLC participants

We also found that these six issues were just the tip of the iceberg. On a separate board, students pinned other ideas on where NTU and Foundation can help out taxpayers, including stopping sin taxes, ending corporate welfare, and fighting for bacon (yes, we had some serious bacon fans at ISFLC). All of this proved that young people are just as interested in the important fiscal issues as any other age group.

Thanks to everyone who came by our booth and let their voices be heard and congratulations to Annie Setten who will be interviewed next Friday!

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Troop Withdrawal Proposals
Posted By: Michael Tasselmyer - 02/13/13

During a night that generally lacked specific policy proposals, President Obama used a portion of his State of the Union address on Tuesday to outline his plan to bring more American troops home from Afghanistan:

"Already, we have brought home 33,000 of our brave servicemen and women. This spring, our forces will move into a support role, while Afghan security forces take the lead. Tonight, I can announce that over the next year, another 34,000 American troops will come home from Afghanistan. This drawdown will continue. And by the end of next year, our war in Afghanistan will be over.

Beyond 2014, America's commitment to a unified and sovereign Afghanistan will endure, but the nature of our commitment will change. We are negotiating an agreement with the Afghan government that focuses on two missions: training and equipping Afghan forces so that the country does not again slip into chaos, and counter-terrorism efforts that allow us to pursue the remnants of al Qaeda and their affiliates."

The President's comments reflect his previous plans to remove most, if not all, combat forces from Afghanistan by the end of 2014. There remain about 66,000 U.S. troops in the region today, and public support for ending American presence there is high. What is less certain are the budgetary impacts that could stem from the President's proposals last night.

In a 2012 Capitol Hill hearing, Department of Defense Under Secretary Robert Hale told lawmakers that it costs about $850,000 per soldier per year to station one U.S. troop in Afghanistan. That figure suggests a potential $28.9 billion annual cost associated with keeping abroad the 34,000 troops that President Obama wants to withdraw.

Note that any savings incurred from bringing troops home wouldn't necessarily be equal to the entire cost of keeping them abroad. Although it is more expensive to station military forces overseas, there are still costs associated with maintaining a combat force here at home. The extent of these savings would be affected significantly by how Congress decides to act regarding impending sequestration cuts.

Of course, the fluid nature of overseas military operations also makes it difficult to arrive at a definite cost or savings estimate for such proposals. The President's budget for fiscal year 2013 requested $96.7 billion for "Overseas Contingency Operations." Beyond that, it called for $44.2 billion per year for fiscal years 2014-2022.

Ostensibly, some of this funding would go towards "training and equipping Afghan forces," as they assume responsibility for the country's security and American forces enter a non-combat support role. However, any budgetary changes associated with the President's long-term transition proposals will be contingent on the agreement that he is able to reach with Afghanistan's leadership, and how involved the U.S. military will be in its support.

We hope to see a detailed budget proposal from the President in order to assess more completely how this accelerated withdrawal strategy will affect federal spending.

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Costs to Consider: Immigration Reform
Posted By: Michael Tasselmyer - 01/31/13

The 113th Congress is less than a month into its first session, but lawmakers have already spent significant time debating the next move in immigration reform. A commission of 8 Senators recently announced a proposal for legislation that would provide new pathways to legal citizenship for immigrants living illegally in the U.S. now, in exchange for additional border security and enforcement measures.

During the 2012 election season, NTUF used its BillTally research to analyze some Senate candidates’ campaign proposals regarding border security. There are generally three ways lawmakers address border security, and their costs vary:

  • Additional law enforcement: CBO estimated in 2007 that additional border patrol personnel would cost between $120,000 and $180,000 per agent. That range in today’s dollars is about $133,000 to $199,000.
  • Border fencing: A 2009 GAO report found that pedestrian fencing along the Southwest border cost nearly $6.5 million per mile, and $1.8 million per mile for vehicle fencing. Those figures included property acquisition and materials costs.
  • Drones and "virtual" fences: The most recent Selected Acquisition Report from the Department of Defense suggests that MQ-9 drones used by Customs and Border Protection run about $31 million per drone, including ground control equipment. Construction of the SBInet virtual fence was cancelled by DHS after $1 billion had been spent on 53 miles of fence.

As the range in cost estimates shows, comprehensive immigration reform is a complex policy issue that can affect a number of different budgetary functions. For more on BillTally, visit ntu.org/ntuf.

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House Prepares to Dodge the Sequester
Posted By: Nan Swift - 12/20/12

This afternoon, the House of Representatives plans to take up H.R. 6684, the Spending Reduction Act of 2012. According to the House Speaker’s website, the bill:

… replaces the president’s defense ‘sequester’ with common-sense spending cuts and reforms, and reduces the deficit by approximately $200 billion more than the original sequester. The bill focuses on stopping waste, fraud, and abuse in federal programs, eliminating government slush funds (including an ObamaCare slush fund), and reducing waste and duplication in government bureaucracies.

Cutting spending, especially doing so over and above the baseline of the $109 billion in spending restraint called for in the Budget Control Act (BCA), is both laudable and urgently needed.  At the same time, rushing a bill through as part of the Fiscal Cliff package only to avoid the pending $54.7 billion defense sequester is disingenuous , demonstrating a lack of political will to make the tough calls we need to get our fiscal house in order.

Ironically, by including the sequester mechanism in the BCA back in 2011, Congress hoped that when faced with the horror of automatic spending reductions, they would collectively be forced to make exactly those hard decisions. However, the savings outlined in H.R. 6684 are again called “common sense solutions to help end waste, fraud & abuse of taxpayer money” in a write up from May found here.

This begs the question, if these are common sense solutions, why haven’t these savings already been realized? With our deficit topping $16 trillion, Congress should be making every effort to increase accountability and eliminate waste at every opportunity, not simply when it’s useful to avoid cutting pet projects and facing down the defense industry.

While the additional savings from H.R. 6684 will help slow our growing debt, that doesn’t mean that the savings to be found in cutting spending in other areas such as entitlements and in this case, defense, should be left on the table.

As NTU has pointed out again and again, there are billions in savings to be had by going after under performing, unnecessary, and wasteful defense programs.  NTU has written about these reforms here, here, and here.

Last year NTU teamed up with the U.S. Public Interest Group (U.S. PIRG) to find over $1 TRILLION in savings that the right and left of center groups could easily agree on. The list included, “$428.8 billion in savings from ending low-priority or unnecessary military programs.” Surely, programs that such strange bedfellows can agree should be headed for the chopping block makes them every bit as much “common sense” savings as those included in H.R. 6684.

More recently, Senator Coburn (R-OK) released his “Department of Everything” study that found:

The recommendations outlined in Department of Everything could save as much as $67.9 billion or more over ten years without cutting any Army brigade combat teams, Navy combat ships, or Air Force fighter squadrons.

Just as the “Spending Reduction Act of 2012” takes aim at real waste that should be immediately eliminated, Sen. Coburn found the Department of Defense equally ripe for serious reform. Among the many wasteful practices, duplicative programs, and unnecessary spending the Senator discovered:

… the Navy recently funded research examining what the behavior of fish can teach us about democracy while also developing an app to alert iPhone users when the best time is to take a coffee break. The Air Force Office of Scientific Research funded a study last year examining how to make it easier to produce silk from wild cocoons in Africa and South America.9 Both the Navy and the Air Force funded a study that concluded people in New York use different jargon on Twitter than those living in California.

The entire report is well worth a read, especially by our Representatives in the House this afternoon. When legislators go to vote on H.R. 6684, they should know that voting to eliminate yet another ObamaCare slush fund, preventing fraudulent use of the child refundable tax credit, and cutting SNAP waste are all going to help the bottom line.

But those billions can only be the beginning, especially when our debt reaches well into the trillions. There are real and immediate savings to be had by taking a closer look at how our defense dollars are spent. As taxpayers and our economy approach a critical turning point, it demonstrates a lack of leadership and seriousness about our fiscal reality for Congress to continue avoiding the tough decisions they were elected to make.

 

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