Defense Department working toward $700 billion budget for fiscal year 2020
October 26, 2018
ARLINGTON, Va. — The Defense Department is developing a $700 billion national security budget for fiscal year 2020 after being told by White House officials last week to cut the spending plan, Deputy Secretary of Defense Patrick Shanahan said Friday.
Pentagon officials are now looking at potentially $33 billion in spending cuts, Shanahan said after being notified by Mick Mulvaney, director of the Office of Management and Budget, to slash the Defense Department’s projected $733 billion budget for fiscal year 2020.
“So we are not going to reverse course on all of that planning, but we will build two budgets,” Shanahan told reporters during the 2018 Military Reporters and Editors Conference in Arlington, Va.
The comments come more than a week after President Donald Trump surprised Cabinet and Pentagon officials with a new request to cut federal spending. At a Cabinet meeting at the White House, Trump told his secretaries that he wanted them to cut 5 percent from their department budgets for fiscal year 2020, which begins Oct. 1, 2019.
But when it came to the Defense Department, Trump didn’t describe a percentage cut, but instead said the budget would be $700 billion for fiscal year 2020.
Shanahan said Friday that Pentagon officials will approach the budget with an understanding that certain things cannot change, such as contracts that are paid within the next year, and look to prioritize certain projects and determine what could be deferred.
“So the short answer is we are building two budgets concurrently, but it will give the secretary a clear understanding of what the trade-offs are,” he said. “And we’ll go back and we will do as directed by the president to give him a $700 billion budget. And then everybody gets to decide how to work with that.”
The budget should be completed by about Dec. 1, Shanahan said.
Cutting the Pentagon’s 2020 budget from $733 billion to $700 billion would amount to a 4.2 percent spending cut, said Mark Cancian, a senior adviser with the Washington think tank Center for Strategic and International Studies.
“If it were implemented, that would be a huge cut that would undo much of what the Trump administration has accomplished with its military buildup,” he said. “To cut it by $30 billion, that will cut a lot of initiatives they had budgeted – the readiness, rebuilding the military and modernization.”
Such a dramatic slash in spending would take spending closer to levels projected by former President Barack Obama’s administration for 2020. It would trigger cuts across the board, from deferring new programs, shaving benefits and lowering pay raises that would go from 2.4 percent in 2019 to perhaps 1.6 percent in 2020, Cancian said.
Also, spending could decline for shipbuilding and aircraft acquisitions. Among other possible scenarios, there could be reductions to modernization programs for long-range strike bombers and the Army could have to pull back on spending for its vehicles programs.
“It’s deep enough you will have to have cuts across the board, every area will be affected,” Cancian said.
The biggest shift: a two-year military buildup dedicated to meeting power competition will come to a screeching halt. And that could trigger the departure of Defense Secretary Jim Mattis, who helped spearhead the effort, Cancian said. The cut would also come on the heels of Trump’s comments this month that Mattis could leave.
“I would not be surprised if this led to his resignation. If it would really be implemented, it would undo what [Mattis] had done. I don’t think he could stay on board,” Cancian said. And “there’s lots of rumors he was leaving anyway. This would be an easy way for him to leave.”
There’s also lingering questions whether the request to cut about $30 billion is a one-year effort or if it must be repeated annually in future years, Cancian said.
“If it’s $30 billion a year into the future, that radically changes the strategy in a lot of programs,” he said.
Trump has been under rising pressure to address increased spending under his administration. Last week, the Treasury Department revealed the U.S. deficit, which is the shortfall between federal revenue and spending, reached $779 billion in fiscal year 2018, a 17 percent increase from a year earlier. The deficit figure marks a six-year high.
Trump conceded tough decisions were made to increase defense spending during the first two years of his administration.
“We had to fix our military. Our military is in the process of being fixed,” Trump said during last week’s Cabinet meeting. “I made deals with the devil in order to get that done because we had to improve our military. Our military was depleted. It was in bad shape.”
However, there are still plenty of obstacles to overcome before lawmakers can reach a spending plan deal on the next defense budget.
When lawmakers return for a new congressional session in January, they will first need to address spending caps that are slated to return in 2020 under the Budget Control Act of 2011.
The BCA installed spending limits for defense and non-defense spending until 2021. Though lawmakers lifted those spending caps for 2018 and 2019, those limits return for the 2020 fiscal year.
The spending cap is slated to decrease the defense budget to $576 billion for the 2020 fiscal year, if no action is taken. And if no deal is reached and budget caps are exceeded in the new fiscal year, it raises the threat of sequestration — automatic, across-the-board budget cuts.
Stars and Stripes reporter Claudia Grisales contributed to this story.