Bullets lay on top of US currency. (Getty)
As the defense community digests the impact of the debt ceiling deal on national security spending, there are differing opinions about whether the agreement should count as a win or a loss for the Pentagon. Last week, former Pentagon comptroller Elaine McCusker argued that the agreement, while imperfect, could have been much worse. In the following response, Bryan McGrath, managing director of The FerryBridge Group, says the reality is much worse than that initial assessment.
In an op-ed for Breaking Defense published, former Defense Department official and Senior Fellow at the American Enterprise Institute Elaine McCusker went too far last week (“Why the budget deal is good news for defense—with one key exception”) in attempting to cast a positive light on the recent budget deal allowing for a debt limit increase. The essence of her argument is contained in the essay’s final sentence: “Even though the defense caps are too low and will need to be reconsidered, the agreement to raise the debt limit and set spending caps is positive in that it mitigates further damage to the economy. It frees defense spending from attachment to domestic budgets and sets the stage for a return to long-awaited regular order on annual appropriations bills.”
While she is correct that the agreement overall was positive in mitigating further damage to the economy, she understates the damage done to the defense budget at a precarious time — precarious due both to when it occurs in the budget process and as a response to a worsening global security environment.
There is no question that a debt agreement was necessary. Had the country defaulted, consequences to America’s standing in the world would have been severe, resulting in dire impacts to both the economy and national security. However, pointing to the defense provisions and compiling “less bad” aspects to claim wins just does not add up.
First, McCusker’s claim that “…separating defense and non-defense budget caps is an important signal that funding should be based on requirements and priorities, and not on arbitrary limits dictated by political interests” ignores the obvious fact that they were in no way separated here. The price of non-defense discretionary cuts was, in fact, capping defense spending below the rate of inflation in both FY24 and FY25. Had defense been “off the table,” there would not have been a deal.
Ms. McCusker correctly recognizes that the caps are too low and that additional resources should be applied to DoD stating, “Members of Congress, particularly those who are experts in national security, largely understand these challenges, which is why they have been adding billions to the defense budget request each year.” Given that the caps on spending in both 2024 and 2025 are based on an already insufficient DoD topline (reflected in the 2024 President’s Budget), she concedes that in the absence of debt-limit brinksmanship, Congress would have added considerably to the FY24 budget it is currently marking.
Under this agreement, no additional resources are now available to Congress to achieve its defense priorities, but those priorities will still inevitably be achieved. How? History tells us the cost will be dramatic hits to important DoD priorities that are not as important on the Hill to free up resources. These hits will be painful for the Services to reprogram to, and important programs will be broken in the process.
Next, Ms. McCusker states that “the delay in enactment of annual appropriations year over year results in lost time, money and competitiveness that can’t be bought back. The very existence of a budget deal—once enacted, even if it provides less funding than required—has value and saves money.” While she is right about lost time, money, and competitiveness resulting from Continuing Resolutions, she overstates the impact that this agreement will have on achieving regular order. Specifically, there are extremists in both parties for whom the deal’s automatic 1% topline cut (in the absence of an appropriation) would be just fine (especially where the defense budget is concerned) leading to perverse incentives to slow-roll the appropriations process.
The question remains, what would a “defense positive” outcome have looked like? Given the dedication of some to closely link defense spending and non-defense discretionary spending, it is difficult to see how real growth could have been achieved. Therefore, the likely best outcome would have been an FY24 budget that loses no buying power to inflation (approximately $30B higher than the newly-installed cap), with the FY25 cap set at the 2024 level adjusted for inflation. Some Members of Congress are already making public statements about supplemental additions to the levels agreed upon, but absent a national security emergency, this would be a heavy political lift.
Recognizing the insufficiency of the defense topline while pointing to minor provisions of the agreement Ms. McCusker finds attractive has the whiff of “other than that Mrs. Lincoln, how was the play?” to it. We are funding a successful war against our number two strategic rival as we work to deter another with our number one strategic rival. This agreement makes both objectives harder to achieve and diminishes our national security.
Necessary? Maybe. “Good news for defense?” Absolutely not.
Bryan McGrath is the Managing Director of The FerryBridge Group LLC defense consultancy. All opinions expressed here are his own.
