The Department of Defense Budget and the 106th Congress.

Robert J. Shue, Director for Plans and Systems Office of the Under Secretary of Defense (Comptroller)

For me, this was a day of several firsts-my first time to serve as a PDI workshop reporter, my first workshop of the day, and my very first PDI. Imagine my surprise when our presenter, Mr. Robert Shue, began this workshop by requesting a show of hands from the "repeat offenders." Quite a few hands went up, along with a number of chuckles, as Mr. Shue explained that this was the ninth PDI he has spoken at, and he recognized many faces in the audience. He said he wanted to give us a broader perspective of what was going on in Washington and to give us some idea of where we stand with the budget.

Mr. Shue's office, the Under Secretary of Defense (Comptroller) Plans and Systems Directorate, is an extremely busy place. They are involved at the beginning of the budget process as the issuers of the Budget Guidance, and they prepare budget testimony and presentation material for the Secretary and for the Comptroller. These functions, along with issuing guidance for appeals; processing congressional testimony, process, and review of reporting requirements; and monitoring execution, constitute a real "cradle-to-grave" operation.

The 106th Congress As It Now Exists

We remember 1994 as the year of the "Republican Revolution," when the Republican Party took over the Congress, winning over fifty seats in the House of Representatives, obtaining dramatic changes in the Senate, and acquiring a clear majority. However, with each election since then, the Republicans have seen their majority shrink a little more and slide farther away from the 60 percent majority needed to be virtually veto-proof. President Clinton has used the veto pen-one of the most significant tools he has to dictate what happens in Congress-on thirty bills during his two terms. Congress has succeeded in only two of its ten attempts to override these vetoes, and the members simply gave up on the other twenty bills. The lack of a majority with veto override power, the struggles of the conservatives vs. the moderates within the Republican Party, and the Democrats' ability to hold together as a moderate force have all contributed to the situation we've had since the 104th Congress.

Supplementals

By early summer of 1999, we had already seen the passage of two Department of Defense Emergency Supplemental Appropriations. Major issues in these supplementals included funding for Kosovo, military construction, the FY 2000 military pay raise, and Y2K. Congress added significant funding to Defense with these supplementals, therefore paying for requirements that normally would have been included in the FY 2000 budget. By funding these FY 2000 requirements with the 1999 supplemental, Congress created some "head room" for FY 2000 and used it to fund "congressional priorities."

In 1999, for the second year in a row, Congress did not require us to offset (lose in other areas) these funds. This pattern marked a clear departure from the old way of doing business in funding the supplementals. We are now requesting a little over $4 billion in supplementals for FY 2000, and there has been no indication that Congress will require any offsets.

Discretionary Caps

Congress deals with two types of funding-mandatory (legislated requirements such as Social Security and Medicare) and discretionary. Defense has traditionally been about 50 percent of discretionary funding. The balanced budget agreement created caps for this funding, setting levels that spending could not exceed without triggering the Gramm-Rudman-Hollings sequestration. The cap reflects a total of both Defense and non-Defense dollars and still allows some wiggle room to move money back and forth between the two.

Recently, things have moved from cap politics to total surplus politics. The total surplus figure includes off-budget surpluses or deficits, primarily money from the Social Security trust fund. The trust fund has been running surpluses for some time, but not enough to offset the deficit that has occurred from the running of the normal day-to-day government operations.

Suddenly, the economy was doing so well that we now started to see surpluses in "On Budget" accounts. After Social Security was saved, the President increased the Defense budget and Congress increased the Defense budget. We were the major discretionary account beneficiary.

Defense Spending and the American People 

While we probably won't hear people saying that we need to reduce Defense, the question will be, Do we need to increase it so much that we won't be able to fund non-Defense priorities? There is a consensus in the population for Defense spending, but at the same time, the American people are out there driving over roads filled with potholes and bridges that are ready to fall down. They see that their schools are in bad shape, and they see water treatment facilities that need to be replaced.

While the people understand the need to maintain Defense spending, there is probably not as strong a consensus in the population as there is in Congress. This is a little bit surprising because Congress itself is getting less and less familiar with Defense. Fewer and fewer members of Congress have served in the military or have family members who have served. This makes it more difficult to explain why we need more money for Defense.

How Did We Get to the End Last Year?

Congress used funding mechanisms and funded the FY 2000 raise in the FY 1999 surplus. In a rush to finish and balance the books, Congress buried a one-half of 1 percent across-the-board cut amounting to $1.1 billion in budget authority in the consolidated appropriations bill. The military pay date was delayed and changes were made to the prompt payment requirements to allow delay in payment of government bills into the next fiscal year. Now Congress has repealed those changes; pay dates and prompt payment requirements have been restored. The likelihood exists that we may see across-the-board pay curs again this year.

Congressional Adds

We have been getting congressional adds consistently since 1996. We know the amount in FY 2001 will be at least $4 billion. We like to get congressional adds, and we hate to get congressional cuts. And we really hate the idea that a congressional cut to our program becomes a congressional add to someone else's program. Someone always pays the price for a congressional add, and there are better odds in this area than in the lottery that someday your number and your turn to pay will come up.

Department of Defense Shares

In FY 2000, less than 15 percent of federal outlays goes to Defense-the lowest outlay since before World War II. Spending on Defense is less and less of the Gross Domestic Product (GDP). Defense spending continues to go down while the economy is still going up. If the economy is doing that well, Defense should be going up as well. Currently Defense's share of the GDP is still around 3 percent, but that figure is forecasted to decrease in the out years, sliding to about 2.6 percent. Congress made some changes to the FY 2001 President's Budget--the Republicans wanted to create a tax cut and they wanted to cur domestic spending programs. They reallocated the President's Budget and gave Defense $4.5 billion. They took $26.5 billion from non-Defense and they provided for a tax cut. The President has said he will not sign a domestic appropriations bill that doesn't provide the amount of money he has requested. Chances to override any veto are not good.

The House of Representatives looked at the FY 2000 Defense supplementals, passed a stand-alone bill, funded it, and created some more "head room." They added money for TRICARE and fuel--costs that were in the FY 2001 budget, but are now funded in this supplemental. This makes more money available for those congressional priorities again.

By the end of this workshop, I had a much better understanding of the way Congress does business and how they make decisions about our federal budget. This short article cannot completely cover all of the material that Mr. Shue presented to us. His slides and his thorough knowledge of his subject, combined with his witty and quick delivery style, made attending this workshop an informative and enjoyable experience. This may have been my first PDI, but it will not be my last, and I will be happy to become another repeat offender."

Ronnette Coffman is a Budget Assistant with the Navy Personnel command in Millington, TN. She attends State Technical Institute in Memphis and is a member of Phi Theta Kappa Honor Society. She is a post ASMC Secretary for the Tri-State Chapter.