When President Barack Obama signed the American Taxpayer Relief Act (ATRA) of 2012 into law, it was already 2013 – a fact that offers some insight into Congress’ self-imposed difficulties, over the past year-and-a-half, reaching agreement on a fiscal path for the government.
A quarter into fiscal year 2013, the Department of Defense (DoD), along with the rest of the federal government, was being funded by a six-month Continuing Resolution that extended 2012 funding levels until the end of March 2013. A combination of political factors – chief among them the presidential election and the “fiscal cliff” debate – prevented Congress from taking any action on the Pentagon’s 2013 budget proposal. The last congressional activity on the 2013 National Defense Appropriations Act – the law that will write the checks for the department’s year of operations – occurred on Aug. 2, 2012, when the Senate Appropriations Committee approved its own proposal. As of mid-January 2013, the committee’s defense appropriation had not been brought to the floor for a vote.
In a normal year, the National Defense Authorization Act (NDAA), the product of a vigorous congressional debate about the Pentagon’s February budget proposal, establishes the national defense policy and approves funding levels that offer a predictable overview of the appropriation to come.
2012 has not been a normal year:
• Obama’s $613.9 billion budget request for the DoD, constrained by the budget caps imposed under the Budget Control Act (BCA) of 2011, was $31.8 billion less than was appropriated for the department in FY 2012. The reduction in requested funding for overseas contingency operations (OCO) was unsurprising, given the end of U.S. combat in Iraq and the drawdown in Afghanistan, but the “base budget” – funds for all activities other than OCO – was $5.2 billion less than the FY 2012 appropriation, and $45.3 billion less than the budget projected by the administration a year earlier. It was the first time the Obama administration proposed a real decrease in defense spending from the previous year’s appropriation.
The caps imposed by the BCA mandate $487 billion in cuts to defense spending over the next decade.
• While under the BCA-mandated cap, the administration’s proposal made no mention of the possibility of sequestration – another BCA provision that, given the failure of the Congressional Joint Select Committee on Deficit Reduction (or “Super Committee”) to agree on additional targeted spending cuts, was scheduled to mandate another $1.2 trillion in unspecified budget cuts over nine years. Half these cuts were to be imposed on discretionary defense expenditures.
Before the proposal was released, Secretary of Defense Leon E. Panetta and several White House representatives stated explicitly that the administration had not prepared a FY 2013 budget that fits under the lower caps that would be imposed by sequestration.
• The American Taxpayer Relief Act, which addressed the simultaneous expiration of tax cuts enacted during the George W. Bush administration and the scheduled trigger of sequestration – together, the so-called fiscal cliff – marked the second time Congress proved unable to agree on sequestration-busting spending cuts. The fiscal cliff deal did nothing about the federal government’s debt ceiling, delayed the onset of sequestration by two months, and left unchanged the impasse over appropriations. In other words, the law did not resolve the debate over budgets – it prolonged and complicated it.
The persistent threat of a sequester applied to FY 2013 funds that have yet to be appropriated made the National Defense Authorization Act, which was signed into law on the same day as the ATRA, less relevant than is typical. The NDAA is of interest not because it foretells FY 2013 appropriation for the Defense Department – though that may yet prove to be the case – but because it illuminates several issues in the ongoing discussion between the executive and legislative branches about the future of U.S. defense policy and spending.