The Center for Strategic and Budgetary Assessments is releasing a new report on the chaotic budget picture for fiscal 2014 today. Normally, Todd Harrison, one of the best defense budget experts in town, does an annual analysis of the Pentagon's budget request, but this year that made no sense, he told Morning Defense. That's because the continuing resolution and sequestration have rendered that document meaningless, which is to say, there's no way the Pentagon is getting that much money this year.
So, instead of his regular analysis, Harrison took a look at how sequestration played out last year in an attempt to forecast how things could go down this year. He also examined past defense drawdowns to further understand what could be in store for the Pentagon.
-- BUDGET BASICS - UNDERSTANDING THE NUMBERS: Under the current CR, the Pentagon's base budget is roughly $495 billion - about $30 billion less than the $523 billion the Pentagon requested for 2014.
If the continuing resolution is extended and sequestration remains in place, the Pentagon would need to cut an additional $20 billion during this fiscal year, Harrison explained. That's how you get the $50 billion figure that Pentagon officials often cite.
"It's a $20 billion cut from where they are right now; it's a $50 billion cut from where they wanted to be," Harrison explained.
-- IS SEQUESTRATION THE FLOOR OR THE CEILING?: "The main takeaway from the report is the sequestration-level spending caps may not be the floor for defense like a lot of people are thinking. That really might be the ceiling," Harrison said. "The floor, I think, would look something more like prior drawdowns and that would be a significantly steeper reduction."
Under sequestration, the lowest the base budget will fall is to $475 billion in 2014. But if this drawdown follows the same pattern as past drawdowns, DoD spending could drop as low as $415 billion. This wouldn't happen immediately in 2014, but over time, Harrison explained.
-- PROCUREMENT PROBABLY WON'T HIT HISTORIC LOWS: In previous drawdowns, procurement spending fell to about $62 billion in today's dollars, according Harrison's analysis. It happened at the end of the Cold War and after the Vietnam War. After Korea, it fell closer to $50 billion.
Harrison said he doesn't think procurement dollars will drop that far this time around. Under sequestration, procurement money falls to $99 billion.
For more of Harrison's analysis, read his report, which will be released later today, and tune into the CSBA press briefing, which will be webcast here: http://bit.ly/1dkmq7J