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Thursday, December 19, 2013

Defense: FY2014 Authorization and Appropriations - R43323

Pat Towell
Coordinator Specialist in U.S. Defense Policy and Budget

President Obama’s FY2014 base budget request of $552.0 billion in discretionary budget authority for the Department of Defense (DOD) and defense-related programs of other agencies (excluding war costs), exceeds by $53.9 billion the legally binding cap on defense funding for FY2014 that was enacted in 2011 as part of the Budget Control Act (P.L. 112-25). Unless the Budget Control Act (BCA) is amended, either Congress will have to cut the Administration’s National Defense request by $53.9 billion (about 9.8%) to meet the BCA cap of $498.1 billion, or else the BCA law will reduce the appropriation to the level set by the cap through a process of sequestration, beginning in January 2014.

In their initial actions on the annual defense funding bills for FY2014, the House and the Armed Services and Appropriations Committees of the Senate approved defense funding totals (excluding war costs) that were very close to President Obama’s so-called “base budget” (i.e., non-war) request, regardless of the BCA cap.

For DOD’s base budget, both the version of the National Defense Authorization Act (NDAA) passed by the House on June 14, 2013 (H.R. 1960), and the version reported by the Senate Armed Services Committee on June 20, 2013 (S. 1197), would differ from the President’s request by less than $50 million, in terms of the net totals authorized. For war-related operations (designated as “overseas contingency operations” or OCO), the Senate committee version of the authorization bill would make few changes to the Administration’s $80.7 billion request, while the Housepassed bill would add $5.4 billion.

Both versions of the authorization bill also include provisions bearing on contentious policy issues including the armed services’ handling of sexual assault cases and the treatment of detainees currently held at the naval base at Guantanamo Bay, Cuba.

In the case of the FY2014 DOD Appropriations bill (H.R. 2397), which funds most discretionary DOD programs except for military construction, the version passed by the House on June 24, 2013, and the version reported by the Senate Appropriations Committee on August 1, 2013, differed by a relatively larger amount. Compared with President Obama’s request for $589.4 billion (including both base budget and OCO funds), the version passed by the House on June 24, 2013, would provide a reduction of about $4.14 billion while the version reported by the Senate Appropriations Committee on August 1, 2013, would make a net reduction of about $2.17 billion.

In conjunction with funding for military construction and for defense-related spending in other agencies in other appropriations bills passed by the House and reported by the Senate committee, either version of H.R. 2397 would result in total DOD base budget appropriations that would exceed the BCA limit for FY2014 by nearly as much as President Obama’s initial request.

Because legislation to fund the federal government in FY2014 had not been enacted prior to the start of the fiscal year on October 1, 2013, DOD, like most other agencies, was then subject to a lapse in appropriations during which agencies are generally required to shut down. The Office of Management and Budget (OMB), however, identified a number of exceptions to the requirement that agencies cease operations, including a blanket exception for activities that "provide for the national security." Under that exception, all active-duty military personnel and many DOD civilian employees remained on their jobs through October 17, 2013, when the FY2014 Continuing Resolution (P.L. 113-46) was enacted, which allowed DOD and all other federal
agencies to resume their normal operations through January 15, 2014, at a rate of spending equal to the rate provided by the FY2013 Consolidated and Further Continuing Appropriations Act (P.L. 113-6), subject to reductions made on March 15, 2013, by the BCA-mandated sequestration process.

Excluding war costs, the FY2014 Continuing Resolution funds DOD and defense-related programs of other agencies (which comprise the “National Defense” budget function) for roughly one-quarter of a year at a rate that would amount to an annual budget of $518 billion. That annual total would amount to a reduction of $34 billion (or 6.2%) from the President’s request for the socalled “base budget”—that is, excluding war costs. However, it would exceed the BCA cap on National Defense spending in FY2014 by $21 billion (or about 4%). Accordingly, if Congress funded the National Defense function at that level for the entire year, and if the BCA were not amended, OMB would be required to issue a sequestration order reducing National Defense funding by 4%, in order to meet the relevant BCA cap.

From FY2014 through FY2021, the annual caps on National Defense funding that were enacted into law as part of the BCA would increase by about $10 billion per year, which would not quite cover the anticipated cost of inflation.

For DOD, which accounts for about 96% of the National Defense budget, the Administration’s $526.6 billion base budget request for FY2014 exceeds by about $31 billion DOD’s postsequester, base budget funding level for FY2013, which is estimated by DOD at $495 billion.

Date of Report: November 20, 2013
Number of Pages: 90
Order Number: R43323
Price: $29.95

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