Defense CEOs warn of budget disaster

Pentagon and defense industry brass are warning lawmakers that passing a stopgap budget resolution for the remainder of 2011 will cause budgetary chaos at the Pentagon and result in job losses across the country. 

The House next week is expected to take up a continuing budget resolution that would shave $13.2 billion from the Pentagon’s $531 billion request. 

{mosads}But Department of Defense and industry officials are waging a lobbying campaign against that approach and are using words like “crisis” and “disaster” to describe the potential impact of the resolution.

DoD, industry and pro-defense lawmakers say the continuing resolution, or CR, would constrain the military since it would keep in place program budgets from the previous year. Officials say locking the department in at 2010 levels would handcuff DoD program managers. 

In a letter sent late Monday to Democratic and Republican congressional leaders, the chief executives of 14 U.S. defense firms called for “an omnibus national security appropriations bill for fiscal 2011” in place of a CR. 

“The current CR provides funding for most aerospace and national security programs at fiscal year 2010 levels,” the executives wrote. “Failure to address funding decisions for individual national security programs on a full-year basis will lead to program dislocations, funding interruptions and adverse consequences on U.S. employment not only in the current fiscal year but for many years to come.”

The executives also are worried a CR would include “provisions limiting production rates and prohibiting new starts.”

That letter was sent to House Speaker John Boehner (R-Ohio), House Minority Leader Nancy Pelosi (D-Calif.), Senate Majority Leader Harry Reid (D-Nev.) and Senate Minority Leader Mitch McConnell (R-Ky.). It was signed by defense industry heavyweights such as Lockheed Martin CEO Robert Stevens, Boeing CEO Dennis Muilenburg, Northrop Grumman CEO Wes Bush and Raytheon CEO William Swanson, among others.

In a separate letter to Boehner, a dozen defense industry trade associations warned that the cuts could affect jobs at a time when the nation’s employment picture looks bleak. 

“The lack of adequate DoD funding could threaten thousands of U.S. manufacturing and related jobs connected to these programs,” the associations wrote to Boehner.

Defense Secretary Robert Gates has called the prospect of extending the current CR, which expires March 4, “a crisis on my doorstep.” One Pentagon budget source told The Hill on Monday that lawmakers are “making a disaster that will only increase in scope.”

“The only real help I see as plausible right now for defense is Congress working to ease some of the restrictions surrounding the no new starts and other prohibitions typically found in CRs,” said Mackenzie Eaglen of the Heritage Foundation, who is also a former Senate defense aide.

Congressional aides and defense sources say going forward with CR funding levels for programs could cause budgetary chaos when the Pentagon’s 2012 request arrives next week. Defense sources have said they are basing many of their program funding levels on educated guesses of where final 2011 levels might fall.

Some planned program work would have to be delayed due to a lack of ample funds — and DoD would be forced to shift funds among programs, setting up delicate funding decisions.

Defense and industry officials also are concerned that funds would continue to flow at past levels to programs the Pentagon wants to ax for good, like the Marine Corps’ Expeditionary Fighting Vehicle (EFV). 

Defense appropriators in the House and Senate last year proposed cutting the White House’s 2011 defense spending request by $7 billion and $8 billion, respectively. But neither chamber has yet taken up those appropriations bills.

Pentagon officials favor a cut of that size, as well as the budgetary and programmatic freedom an appropriations measure would give them.

Last week, House Appropriations Committee Chairman Hal Rogers (R-Ky.) announced federal agency funding levels for a yearlong CR expected to hit the House floor next week. Rogers intends to put forward a $517.7 billion defense top-line figure, $13.2 billion lower than the Obama administration’s 2011 request.

The House CR will “meet the budget committee’s non-security discretionary total of $58 billion, but go even further to find savings in virtually every area of the federal government, reducing spending from the president’s … request by a total of $74 billion,” Rogers said in a statement.

Senate leaders and appropriators have been mum on how they plan to proceed. 

“Right now, Senate action is unclear, but if the 2011 appropriations mark for defense is any indication, then the Senate will have no problem going along with these [House] defense cuts,” Eaglen said.