Budget Debate on FY17 Not Over, Possible Ramifications for Space Posture

In mid-October last year, the President and Congress were still locked in a standoff over the size and shape of the federal budget for the fiscal year that had already begun at the beginning of the month. There was little certainty about how the White House and congressional leaders would resolve the disagreement. In the meantime, the government was on the equivalent of budgetary life support – inching forward on a stop-gap measure known as a continuing resolution, or CR, that would run out at the end of December. Most observers expected political brinksmanship to propel developments right up to the holiday season and threaten another government shutdown.

Then, somewhat unexpectedly, the political impasse dissipated with the announcement of an agreement on both the debt ceiling and the federal budget for the remainder of FY16 as well as for FY17.

The two-year deal that finally emerged, called the Bipartisan Budget Act (BBA) of 2015, gave the Defense Department $581 billion for the remainder of the fiscal year 2016. That figure was $5 billion below both what the President had requested in February to begin the budget process and what Congress had passed earlier in the year through the National Defense Authorization Act (NDAA).

For the upcoming FY17 defense budget, the BBA set out a total of $525 billion for the base budget and $59 billion for Overseas Contingency Operations (OCO) spending, totaling $584 billion. While that reflects a miniscule amount of growth over the previous year (less than 1%), it is even less favorable when compared to the plan DoD was counting on in February of last year, which called for $547 billion for the base in FY17.

That’s a difference of $22 billion, a figure that will generate significant pressure among the Department’s funding priorities. Considering several accounts in DoD’s budget, like personnel compensation and force size, are off limits, a large portion of the reductions will be spread among modernization initiatives. And if space accounts are targeted, it could damage efforts to transition to next-generation architectures and capabilities.

Proponents of a bigger defense budget are quick to point out that the flattening out of the defense budget is in stark contrast with the emerging threat environment. An increasingly insecure geopolitical reality includes continued instability and the rise of ISIS in the Middle East, a newly aggressive Russia, China’s pursuit of regional hegemony, and challenges from Iran and North Korea. At the same time, new threats are emerging in space and cyberspace.

That is why we hear defense hawks in Congress protest that the FY17 defense budget is insufficient. At a public CSIS event last December, congressional staff stated that some Republicans will push for raising the level of funding for defense. Republicans in Congress could again seek to offset the shortfall by adding money for base budget priorities inside of OCO budget accounts, but such efforts were ultimately blocked last year by both the White House and Democrats in the Senate. There are indications that some congressional Democrats are gearing up to oppose such a move, however, it cannot yet be ruled out that relatively pro defense Democrats might quietly support some smaller level of base budget offset via OCO.

We should know soon how the debate will shape up this year, as the election and congressional leadership’s desire for regular order will accelerate the legislative schedule into the early part of the calendar this year, with a heavy workload in the first quarter. The President’s budget request is set to be delivered on February 9th, and congressional hearings will proceed apace immediately thereafter.

We should give the Administration and the DoD as much flexibility as possible so that funding levels don’t stifle necessary changes to maintain preeminence in space. As General John Hyten, Commander, Air Force Space Command stated in a July 2015 statement, “we must enable our Space Mission Force to conduct operations in and through a contested and degraded operational environment.”

In the SATCOM domain, progress was made last year with the Pentagon’s Pathfinder program, which seeks to define new space acquisition models that will inform future government space architectures and the role that commercial satellite operators will play.

These and similar future planned investments are critical to ensure the resiliency and survivability of the national security SATCOM enterprise, while simultaneously freeing Airmen to focus on warfighter effects.