President Obama will release the FY2017 federal budget to the public and Congress on Tuesday February 9, 2017. This is one week later than the usual date for submission of the budget, which is the first Monday in February.
After the FY2017 budget is released senior administration officials will brief the press and begin testifying before congressional oversight committees.
This year, contrary to what has become usual practice, the House and Senate Budget Committees will not receive testimony from the Director of the Office of Management and Budget (OMB) on an overview of the president's budget request, Senate Budget Committee Chairman Sen. Mike Enzi (R-WY) and House Budget Committee Chairman Tom Price (R-GA) issued a joint press release announcing that the committees will not hold hearings on an OMB review of the president's FY2017 budget.
Sen. Enzi said rather than hear from the administration on the FY2017 budget,the committees “should focus on how to reform America’s broken budget process and restore the trust of hardworking taxpayers.”
The House and Senate Armed Services Committees have not yet announced when they will receive testimony from the Secretary of Defense and Chairman of the Joint Chiefs of Staff on the FY2017 Department of Defense (DoD) budget.
Next week, Highlights will include a brief overview of the FY2017 DoD budget request and identify links to official statements and available budget material.
The FY2017 Department of Defense (DoD) budget will total $582.7 billion DoD Secretary Ash Carter revealed in a speech to the Economic Club in Washington, DC today.
This amount is consistent with the budget agreement signed in December. Carter said the funds provided in this agreement allow DoD “to focus on the shape, making choices and trade-offs to adjust to a new, strategic era, and to seize opportunities for the future.”
Carter indicated that the budget request will begin to show that DoD is taking a longer view of countering security threats. “Even as we fight today's fights, we must also be prepared for the the fights that might come 10, 20 or 30 years down the road,” he said.
The secretary identified the challenges that underpin the key decisions that he and the senior civilian and military leaders made in developing this budget plan: Russian aggression in Europe; China's rise in the Asia Pacific region; security concerns caused by North Korea and Iran; and continuing fight against ISIL (Islamic State of Iraq and the Levant) and other forms of terrorism. Carter said addressing these challenges requires “some new thinking on our part, new posture in some regions and also new and enhanced capabilities.”
Carter said the FY2017 budget will include $7.5 billion more than than last year for new investments to fight the war against ISIL, 50 percent more than last year. Citing other related investments Carter said the budget would include over 35,00 GPS-guided smart bombs and laser-guided Rockets He also said the Air Force would defer the final retirement of the A-10 aircraft (being used extensively in action against ISIL) until 2022. Congress has been highly critical of the proposal to retire the A-10, stopping it's retirement in the past.
The budget will support additional U.S. Forces in Europe and training with U.S. Allies under the European Reassurance Initiative by increasing funding to $3.4 billion in FY2017.
Research and development funding in FY2017 will total $71.4 billion, according to Carter, to fund an enhanced effort to advance and field new capabilities.
Investments in strategic capabilities highlighted by Carter include technologies being developed in the Strategic Capabilities Office (SCO). These efforts will “reimagine exiting DoD, intelligence community and commercial systems by giving them new roles and game-changing capabilities.” SCO funded capabilities will include: advanced navigation (e.g., microcameras and sensors); swarming autonomous vehicles (e.g. microdrones); self-driving networked boats; gun-based missile defense; and an arsenal plane (to be a launch pad for conventional payloads).
FY2017 funding for submarine capabilities will total $8.1 billion and total over $40 billion over five years. Investment in cyber warfare and security will be $7 billion in FY2017 and $35 billion over five years, to “improve DoD's network defenses…build more training ranges… and develop cyber tools and infrastructure to provide offensive options,” Cater said. He also stressed that the FY2017 budget will contain more funding than the $5 billion in last year's budget to enhance the “ability to identify, attribute and negate all threatening action in space.”
On making tradeoffs to fund additional submarines and planes Carter said DoD tried to protect modernization and readiness posture. One tradeoff Carter mentioned was buying only as many Littoral Combat Ships (LCS) needed, Carter said.
Carter also said the budget continues acquisition reform, reduces overhead to allow DoD to reallocate $8 billion over the next 5 years to higher priorities, and pursues organizational reforms.
Full details of the FY2017 federal budget will be released by the president on Tuesday, February 9.
The Congressional Budget Office (CBO) projects the 2016 ”baseline” federal budget deficit will be $544 billion, $105 billion higher than in 2015 ($439 billion). If this 2016 deficit projection is achieved, it would mark the first increase in the deficit since 2009.
The deficit projection is somewhat misleading, however, as $43 billion of the deficit results from a timing quirk. Because October 1, 2017, the first day of FY2017, falls on a Sunday, some government payments normally to be made in FY2017 are expected to happen in FY2016, thus increasing the FY2016 deficit while lowering the 2017 deficit.
The projected $105 billion increase in the 2016 deficit results as a four percent increase in estimated revenue (+$127 billion), which is more than offset by a projected six percent (+$232 billion) rise in outlays.
Higher revenue projections come from continuing growth in the economy leading to rising incomes. Revenues from individual income tax payments (up $80 billion or five percent) will rise as incomes increase. However, corporate income tax revenue is expected to decline by five percent (-$17 billion) because the FY2016 Consolidated Appropriations Act extended expired tax provisions and made the extension retroactive to the beginning of 2015. Other revenues (including payroll taxes) are projected to increase by $64 billion.
CBO projections show that total federal outlays should be $3.919 trillion, up $$232 billion from the pervious year ($3.687 trillion).Total mandatory spending in 2016 ($2.466 trillion) is up $167 billion, accounting for more than 70 percent of the total spending increase. Social Security outlays will rise $28 billion (Social Security recipients will receive no cost of living increase in 2916), while total net outlays for Medicare, Medicaid, the Children;s Health Insurance Program, and health insurance premium subsidies are expected to increase by $104 billion.
CBO expects total discretionary outlays will be $1.198 trillion in 2016, up $32 billion, as the Bipartisan Budget Act raised statutory limits on both defense and nondefense discretionary spending.
Net interest payments will rise by $32 billion in FY2016, according to CBO. The rise is attributed to the continuing increase in the national debt and projected rising interest rates.
The CBO report also includes deficit estimates for 2016 through 2026. These estimates show baseline deficits increasing slightly through 2018 to $572 billion and then increasing at a faster annual pace reaching $1.366 trillion in 2026. assuming no changes to current law.
Underlying CBO’s baseline deficit projections are economic assumptions that expect the economy to grow by about 2.5 percent in real terms for the next few years, but then fall back to an annual average real growth of 2 percent from 2018 through 2026. The slower growth in the outyears results from slowing in the supply of labor.
CBO expects the annual unemployment rate to drop to 4.5 percent in 2016 and hold that rate for a few years. However, the rate is then expected to rise to an average of 5 percent through 2026. CBO projects the rate of inflation (as measured by the change in the Consumer Price Index–CPI) to stay below 2 percent until 2017 when it will rise to 2.4 percent. The CPI is expected to average that level through 2026.
Last week, the Office of Personnel Management (OPM) announced changes designed to “modernize and strengthen” procedures for conducting background checks for federal employee and contractors and for protecting sensitive material.
The new procedures result from a interagency review directed last year in response to increasing cybersecurity threats. The review was undertaken to “re-examine reforms to the Federal background investigations process, assess additional enhancements to further secure information networks and systems, and determine improvements that could be made o the way Government conducts background investigations,” according to the Directors Blog posted on the OPM website.
Under the actions announced by OPM the government will establish a new organization to to performs background investigations, assign responsibility for information technology (IT) security to the Department of Defense (DoD), and clarify governance authorities, roles, and responsibilities.
A new entity, the National Background Investigation Bureau (NBIB), will absorb the existing Federal Investigative Service (FIS) and be the sole provider of government-wide background investigations. The new bureau will report to the OPM Director. The NBIB head will be appointed by the president and the bureau will be headquartered in Washington, DC.
DoD will design, build, secure, and operate NBIB's IT systems. The administration wants to “leverage DoD's significant national security, IT, and cybersecurity expertise, incorporating security into the fundamental design of the systems, strengthening the security of the data environment, and providing robust privacy protections.” According to OPM, the FY21017 budget will include an additional $95 to develop IT capabilities for this effort. Also, the Performance Accountability Council (PAC), chaired by the Office of Management and Budget (OMB), will establish an interagency cybersecurity advisory group to advise it on system development and threat mitigation.
The administration will clarify the roles of the players in the new bureau and assign new responsibilities, and issue new guidance where appropriate.
These actions are part of the administration's plan to improve the security clearance system that includes: a five-year reinvestigation requirement for all individuals with a security clearance; reducing active security clearances by 17 percent; and recommendations to enhance information sharing between State, Local, and Federal Law enforcement Agencies.
President Obama last month ordered federal agencies to take action to improve the Senior Executive Service (SES).
Executive Order #13714 was issued to “to strengthen the recruitment, hiring, and development of the Federal Government's senior executives.”
Office of Management and Budget (OMB) Director Shaun Donovan, in an OMB blog said the action would “attract, develop and retain the best talent needed to continue moving the Federal Government forward in the 21st century.”
The administration is increasing attention on the SES workforce as it is estimated that 60 percent of SES personnel will be eligible to retire.
The action directed in the Executive Order emphasizes three areas: 1) Hiring the best talent; 2) Strengthening SES development; and 3) improving SES accountability, recognition and rewards.
To hire the best talent, agency leaders are directed to regularly track SES vacancies and recruiting efforts to ensure top management attention. OMB will evaluate agency SES selection materials and recommend changes to streamline the hiring process. Agencies will also put into place a talent and succession management process for SES, Senior Level (SL), and Senior Scientific or Professional (ST) employees.
To strengthen SES development efforts agencies are directed to prepare rotation plans based on agency needs and employee professional growth opportunities. A government-wide goal (not for each agency) is set to rotate 15 percent of SES employees for a minimum of 120 days during 2017. SES employees will be required to complete at least one professional activity each year and receive a leadership assessment every three years. The order requires each agency to prepare a formal “onboarding program” for new SES employees.
To improve SES accountability, recognition, and rewards, the administration will increase funding for agency performance rewards caps from 4.8 percent to 7.5 percent, which was the agency average in 2010 before OMB placed restrictions on rewards. OMB will provide guidance on how these rewards should be distributed and allocated. Initial pay rates for SES employees will be increased to ensure that they earn more than their General Schedule (GS) employees.
The Executive Order establishes a Subcommittee of the President's Management Council (PMC) to advise the Office of Personnel Management (OPM) and the president on implementation of the requirements in the Executive Order.
It also sets up a time line for implementation of these required actions. OPM will evaluate the the Qualification Review Board (QRB) process and issue guidance, within 90 days, to agencies on acceptable materials for QRB consideration. Within 120 days after this guidance is issued agency heads will examine their career SES hiring process and make changes to “make it more efficient, effective, and less burdensome for all participants.” By May 31, 2016 agencies with 20 or more SES positions will submit to OPM a 2-year plan to increase the number of rotating SES employees.
The department of Defense, Energy, Health and Human Services, Housing and Urban Development, and Veterans Affairs will implement reforms by September 30, 2016. The departments of Agriculture, Education, Labor, and Transportation, and the National Aeronautics and Space Administration, Environmental Protection Agency, and the Small Business Administration will implement these requirements by September 30, 2017. The departments of State Treasury, Interior, Commerce, and Homeland Security will implement these reforms by September 30, 2018.
DoD reported last month that since August 8, 2014, the cost of U.S. military operations in Iraq and Syria (Operation Inherent Resolve-OIR) against the Islamic State of Iraq and the Levant (ISIL) reached $5.53 billion. That is almost twice the $2.91 billion total cost DoD reported in June 2015.
The average daily cost is $11.2 million, up from $9.2 million reported in June. DoD reports that $5.7 million of the daily average is for flying OPTEMPO, $2.6 million for munitions, $1.6 million for operational support, and $1.1 million for logistical support.
The Air Force ($3.8 billion) is bearing almost 70 percent of the total cost, while the Army share is 13 percent ($725 million) and the Navy share is 11 percent ($605 million). Special Operations Command (SOCCOM) costs at $378 million are 7 percent of the total.
Air Force costs are averaging $7.7 million per day, while the Army daily costs are averaging $1.5 million and Navy costs $1.2 billion a day. Special Operations Command (SOCOM) costs are averaging $0.8 million daily.
According to DoD, 21,113 close air support, escort, and interdiction air sorties under OIR were conducted in 2015, up significantly from the 6,591 in 2014.
Through January 10, 2016, DoD reports that U.S. and partner nations have flown over 64,000 total sorties and damaged or destroyed 20,352 targets. This includes 6,221 fighting positions, 5,418 buildings, and 1,170 oil infrastructure targets.
Nations partnering with the U.S in conducting airstrikes against ISIL include Australia, Bahrain, Belgium, Canada, Denmark, France, Jordan, the Netherlands, Saudi Arabia, Turkey, the United Arab Emirates and the United Kingdom.
President Obama will deliver the annual State of the Union Address before a joint session of Congress on Tuesday night, January 12th.
This annual address fulfills the constitutional requirement in Article II, Sec 3 of the Constitution that “The President shall from time to time give to the Congress Information on the State of the Union.” President Obama’s speech this year will mark the 227th time presidents have reported to Congress, either in person or in written form, under this requirement.
By tradition, the president reports annually on the current condition of the nation and lays out a framework for the administration's domestic and foreign policy plans and the upcoming budget request. However, the White House has indicated that this year the president will deliver a “non-traditional” speech addressing challenges rather than only identifying new programs in the budget request.
President George Washington gave the first address on January 8, 1790. Washington and his successor President John Adams delivered their statement in person, but President Thomas Jefferson sent his message to Congress in writing. This practice of providing only a written submission continued until President Woodrow Wilson, in 1913, decided to go before a joint session of Congress to deliver his message.
Between 1913 and 1934 presidents held to no particular tradition, sometimes giving their statements in person and sometimes sending them to Congress only in writing. President Roosevelt reset the oral tradition and used the term “State of the Union” for both the speech and the event, a practice that continues today.
After Roosevelt, most presidents have delivered their State of the Union address in person. Notable exceptions have been written statements by President Eisenhower after his heart attack and by Presidents Truman, Eisenhower, and Carter in the final year of their presidency.
President Washington's “Annual Message” delivered to both houses of Congress in 1790 was 1,089 words in length, the shortest State of the Union message on record. In 1981 President Cater delivered a written message of 33,667 words, the longest message.
Since 1934, when the 20th amendment changed the end date of presidential terms to January 20th,Presidents have delivered their State of the Union messages in January or February. Prior to 1934, Presidents delivered the message in December.
President Calvin Coolidge delivered the first State of the Union address to a national audience on radio in 1923 and President Harry Truman’s 1947 address was the first to be broadcast on television. President George W. Bush’s message in 2002 was the first State of the Union address to be webcast live on the internet.
Since 1966, a representative of the opposition party has delivered a response to the president’s address. The first opposition response was given by Sen. Everett Dirksen (R-IL) and Rep. Gerald Ford (R-MI) in reply to President Johnson's State of the Union address. This year Governor Nikki Haley (R-SC) will deliver the Republican response. Last year Sen. Joni Ernst (R-IA) delivered the Republican response and in 2014 the response was given by Rep. Cathy McMorris (R-CA).
The CRS report “The President’s State of the Union Address: Tradition, Function, and Policy Implications” and the House Of Representatives History Art, & Archives website provide a comprehensive history of the State of the Union Address.
A key element of the FY2016 Homeland Security Appropriations included in the FY2016 Consolidated Appropriations Act (P.L. 114-113) provides funding for the U.S. Coast Guard.
Discretionary funding (appropriated by Congress) for the Coast Guard totals $9.3 billion, $1.2 billion higher than the request. The Coast Guard budget also includes $1.6 billion in Mandatory funding for retired pay.
Coast Guard military personnel will receive 1.3 percent pay raise authorized in the FY2016 Defense Authorization bill. Coast Guard civilians will receive a 1 percent across-the-board pay increase and a .3 percent locality pay raise as Congress did not change the president's recommendations.
Operating expenses account for $7.061 billion of Coast Guard FY2016 discretionary funding, $239 million higher than the request.These amounts fund Coast Guard operational activities worldwide, including personnel costs. Two-thirds of the increase is accounted for by $160 million for Overseas Contingency Operations (OCO), in the Coast Guard budget rather than in Department of Defense account. An additional $41.8 million is provided to reduce critical depot maintenance, $8.4 million to restore operating hours, $14 million to restore cuts to military special pays and bonuses, $2,2 million for a “Bravo-0” response capability, and $899 million for increased personnel levels at Aids to Navigation sites.
FY2016 funding for Coast Guard acquisition, construction, and improvements totals $1.945 billion, $930 million higher than the request. Funding is increased by $640 million for the award and production costs of the ninth National Security Cutter. An additional $70.5 million is provided to begin Phase II of the Offshore Patrol Cutter (OSP). The bill also provides another $95 million for one fully-missionized HC-130J aircraft. Additional funding is also provided for construction of shore facilities ($80 million) and for the capitalization, improvement, and acquisition of family housing ($21 million).
Today, the Senate approved the FY2016 Omnibus Appropriations and the “Protecting Americans from Tax Hikes Act of 2015,” clearing them for the president's signature. The White House issued a Statement of Administration Policy (SAP) supporting both bill indicating the president would sign the final bill. The House passed each bill separately, but the Senate combined the bills into on before voting.
The Senate approved the combined bill 65-33. Twenty-seven Senate Republicans joined 38 Democrats voting for the combined bill, while 26 Republicans, six Democrats, and one Independent voted against final passage.
Earlier today, the House approved the FY2016 Omnibus spending bill by a wide margin 316-113 as 150 Republicans and 166 Democrats voted for the bill. Yesterday, the House passed the tax bill 318-109, as 241 Republicans and 77 Democrats voted yes.
The $1.1 trillion FY2016 Omnibus Appropriations bill, including al 12 appropriations bills, provides $548 billion for defense (DoD and defense-related spending base budgets (including Department of Defense (DoD) and the Department of Energy Energy (DoE) nuclear weapons program) and $518 billion for nondefense budgets.
House Appropriations Committee chair Harold Rogers (R-KY) said “the bill will strengthen national security and military readiness, protect against current and emerging global threats, and provide for our troops and military families.”
Funding in the bill for DoD base appropriations, less Military Construction, totals almost $514.1 billion and $58.6 billion for Overseas Contingency Operations (OCO). These amounts conform to the Bipartisan Budget Act of 2015.
The bill funds a 1.3 percent military pay raise authorized in the FY2016 Defense Authorization bill. DoD civilians will receive a 1 percent across-the-board pay increase and a .3 percent locality pay raise on January 1, 2016 as Congress did not change the president's recommendations.
Operations and Maintenance (O&M) funding in the bill totals $167.5 billion. The bill provides $609 million more than the president requested to mitigate shortfalls in readiness, training, and depot maintenance.
Procurement funding in the bill totals $111 billion. Funding is included for: 68 F-35 Joint Strike Fighters, 102 Blackhawk helicopters, 3 Littoral Combat ships, 2 attack submarines, 2 DDG-51 guided missile destroyers, 5 F-18E Super Hornets, and 12 KC-46 tankers.
Military Construction funding in the bill totals $8.2 billion for military construction projects. Family Housing funding for construction and operations of military housing totals $1.4 billion and addresses the need for more Air Force housing. The bill also includes $623 million for construction and improvement to military medical facilities and $334 million for work to be performed at DoD Education activities worldwide. Funding for Guard and Reserve facilities in the U.S. Totals $551 million.
The combined bill extends or makes permanent more about 50 expiring tax credits. Notably, the bill makes permanent the child tax credit and the earned income tax credit for low and moderate income families and permanently extends the research and development tax credit. The bill ends the ban on oil exports, extends tax breaks for renewable energy, and includes reforms to the Internal Revenue Service. The bill also includes a two-year delay on implementation of the tax on expensive health care insurance, the so-called Cadillac tax.
Congress passes another short-term CR to allow time to vote on FY2016 appropriations and tax extender deals
Congressional Republicans and Democrats completed a deal on FY2016 appropriations and a package of tax provisions, but needed another short-term Continuing Resolution (CR), H.R. 2250, to allow time for votes in both the House and Senate.
The CR extension passed the House and Senate today by voice vote before the current CR runs out at midnight tonight The five-day CR will run until midnight Tuesday, December 22.
House Speaker Paul Ryan (R-WI) announced that the House will vote on the Tax extender bill tomorrow and the FY2016 Omnibus Appropriations bill on Friday.
The FY2016 Omnibus Appropriations bill will fund the 12 appropriations bills at the level agreed to in the Bipartisan Budget Act of 2015 agreed to in October.The total federal funding amount of $1.1 trillion provides $548 billion for defense base budgets and $518 billion for nondefense budgets. Funding for the Overseas Contingency Operations (OCO) accounts totals $73.7 billion. The Omnibus is expected to pass in the House and Senate and the White House has indicated the president would sign the bill.
The Omnibus also includes a number of policy items that had caused much disagreement between Republicans and Democrats during negotiations. For example, the bill imposes new restrictions on travelers entering the US from countries currently not required to have visas. The House had passed legislation barring refugees from coming into the US until a new vetting system is implemented, which the White House strongly opposed.
The Congress also reached agreement on a bill that extends or makes permanent more than 40 expiring tax credits that had been subject to hard bargaining between Republicans, Democrats,and the White House. The bill extends many tax credits. It also makes permanent the child tax credit and the earned income tax credit for low and moderate income families, a priority for Democrats and the White House. The bill permanently extends the research and development tax credit. House Democrats are expected to oppose this bill because the lost revenue is not offset, but Republican leadership appear to have enough support to pass the bill.
Analysis of the Bipartisan Budget Act of 2015
By Honorable Mike McCord
Under Secretary of Defense
(Comptroller and Chief Financial Officer)
Department of Defense
December 10, 2015
The budget deal negotiated by the President and the Congressional leadership is on balance a positive deal for the Department of Defense. The Department did somewhat better than splitting the difference between the President’s budget position on the high end, and the sequester caps in current law on the low end, even without taking into account the additional flexibility regarding Overseas Contingency Operations (OCO) funding in this deal.
Looking only at the base budget, the difference between the President’s position for DoD on the high end and the sequester-level Budget Control Act (BCA) caps on the low end was about $36 billion per year in FY2016 and FY2017. In FY2016, the Department got about $24 billion of that difference and lost $12 billion. In FY2017, the Department got about $13 billion of the difference but lost about $22 billion. Taking the two years together, the Department got $37 billion more than the worst-case BCA levels and $34 billion less than the best-case President’s budget levels.
Compared to FY2015, the Department’s FY2016 base budget would grow by about $26 billion or over 5% in nominal terms (about 3.6% in real terms), the biggest increase during this Administration.
The bill was also designed to give the Department some additional headroom by providing more OCO funding for FY2016 and FY2017 than the negotiators thought the Department needed – in theory up to $8 billion a year above current levels. However, I estimate the unfunded additional cost of the President’s decision to keep extra troops in Afghanistan at over $3 billion annually, which will eat up much of that OCO headroom.
In addition, the President may approve additional activities in the fight against terrorist organizations that will add to OCO costs, and of course the enemy always has a vote. So the Department cannot count on being able to completely control its OCO costs. However, at this time the Department does anticipate being able to recover some of the base budget topline lost in this deal by using $4 to $5 billion per year of OCO flexibility.
Including that OCO flexibility, the Department could end up with as much as 80% of the difference between the sequester caps and the original position in FY2016, and 50% in FY2017.
Put another way, the OCO flexibility provides around 1% a year of additional resources ($5 billion). The Department should end up with about 98% of its original base budget position in 2016 and 96% in 2017 without this OCO flexibility, and up to 99% in 2016 and 97% in 2017 with it.
Structure and content of the deal
In terms of scope and duration, this deal is what we expected, but no more. It’s a two year deal that will carry us through the 2016 election and change of Administrations and is silent regarding any years beyond that. After FY17, the sequester-level BCA caps drop back down to their current status, and the next Administration and Congress will have to decide whether to live with them, repeal them, or further amend them.
Still, by solving both the debt ceiling and budget/sequester issues in one package, this deal does represent a return to bipartisan governance rather than continued lurching from crisis to crisis.
This agreement is silent on what programs would be cut to meet these targets. That is left to the Appropriations Committees (for FY2016) and to the Department (for preparing a FY2017 budget that complies with the deal). Although the Department provided our input to the Appropriations Committees, Congress has ultimate control over what programs are cut to meet the new FY2016 targets.
This deal, by itself, doesn’t give us a dime. The Department still needs Congress to follow this up with appropriations bills in December and again next year to avoid potential shutdowns.
Among the notable aspects or impacts of this deal:
- It re-baselines the DoD budget upward about $30 billion per year above the funding levels of the past three years, so there is reason to believe DoD will be permanently better off by that amount, because future negotiations will begin from a higher starting point. This is just as important a win for the long term as the immediate help we got in 2016 and 2017.
- It marks the first time contingency or war funding targets have been written into a budget deal in advance.
- Therefore the Department now has base and OCO funding trading off against each other, in terms of setting budget priorities, to a greater degree than ever before in 2016 and 2017.
- I expect, as a result, that this deal will almost certainly leave DoD at least as dependent on OCO at the end of this Administration as we were before, it not more so.
Two notable things the budget agreement does not do, both of which represent wins for the Department:
- The bill does not extend the discretionary caps further into the 2020s beyond their current expiration date at the end of FY2021. One of my biggest concerns was that near-term help with our topline would come at the price of extending these statutory caps pressing down on the Defense topline into the peak years of modernizing the nuclear triad after 2020, and fortunately that did not happen.
- Unlike some recent budget deals, this agreement did not freeze federal civilian pay or reduce federal civilian retirement benefits to offset the cost of this deal.
Impact on finalizing the FY2017 budget
While the Department won’t have as much to spend in FY2016 or FY2017 as we had hoped, these cuts were to some degree expected and we can manage them. They came early enough in November to give us time to make informed tradeoffs on how to accommodate that lower funding level and still make substantial progress on Defense priorities and readiness and modernization goals. I am confident we will submit a budget for FY2017 that supports Secretary Carter and the nation’s key national security objectives. I am grateful for all the hard work by the DoD financial management community to make that happen.
Unable to complete action on a FY2016 Omnibus Appropriations bill before the current Continuing Resolution (CR) expires today, Congress passed a short-term CR until Wednesday, December 16. The Senate passed the CR on Thursday by voice vote and the House approved the bill today by a voice vote.
The White House has said the president would sign a short-term extension (a few days) if Congress had reached an agreement and needed more time to finish details and draft the bill.
On introducing the bill, House Appropriations Committee chair Rep. Harold Rogers (R-KY) said “While progress is being made on negotiations for a full-year Omnibus appropriations bill, it is clear that more time I needed to complete the package.” Rogers said he hoped the bill can be completed before the new CR expires.
Senate Appropriations Committee chair Sen. Thad Cochran (R-MS) also expressed confidence on progress toward completion of the Omnibus bill. “Our negotiations are progressing steadily, and I expect that Senators will soon be able to consider a bill that will meet the funding needs for our national defense and other priorities,” he said.
Negotiators have been working for weeks to reach an agreement on an Omnibus bill that includes all 12 appropriations bills. However, the roadblock has been the Republican's desire to include as many as 40 policy riders (legislative provisions that are not related to the bill) and the Democrats refusal to accept most of them. However, the Democrats also have policy riders they want to include.
Republicans prepared a proposal that included riders that the Democrats consider “poison pills, particularly imposing restrictions on Syrian immigrants (possibly including the House-passed bill restricting VISA waivers) and weakening Dodd-Frank reforms. Both would surely bring a presidential veto. But, Democrats are also concerned about other policy riders such as provisions blocking rules on power-plant emissions, changing Labor department rules on retirement accounts and clean water rules, and loosening financial system regulations.
Even so, Democrats also want to include their own policy riders such as repealing the ban on gun violence study by the Center for Disease Control.
Both Republicans and Democrats want to avoid a government shutdown and express cautious optimism that a deal can be reached by next week. But, they acknowledge that negotiations are in a delicate stage, requiring some give by each side to reach a conclusion.
Congress also is working to complete action on some 50 expiring tax credits (so-called tax extenders) that will expire on December 31 before adjourning. These tax credits include individual tax deductions, business incentives (e.g. research and development and new equipment purchases credits), and energy tax credits. Republicans are pushing to include an end to the ban on crude oil exports. Democrats and the the administration want permanent tax credits for low income families and tax credits for renewable energy projects.
House Democrats oppose many long-term or permanent tax credits because of the cost. It is estimated that extending many tax credits would cost $100 billion or more (for 10 years), but that amount could grow to over $700 billion if some credits were made permanent. If such permanent credits are included in the final bill House Democrats won't support it, House Minority Leader Rep. Nancy Pelosi (D-CA) said.
The House and Senate will reconvene on Monday, but House Majority Leader Kevin McCarthy (R-CA) announced that House votes would not be held until Tuesday evening. If a deal on the FY2016 Omnibus Appropriations bill is reached this weekend, Congress could act on it by December 16. However, if the negotiations drag out, another CR extension will be needed.
After three months of legislative accomplishments, Congress makes final push to avoid a government shutdown
When Congress returned in September after the summer recess it faced an exhaustive list of legislative actions before adjourning in December: FY2016 appropriations; Iran nuclear deal; FY2016 Defense Authorization bill; Highway and Transit reauthorization; Federal Aviation Administration (FAA) reauthorization; Export-Import Bank reauthorization; expiring tax credits reauthorization; and increasing the debt ceiling.
Although this Congress has been criticized sharply for its lack of progress, during the past three months Congress has acted on a number of high profile items. Congress and the White House negotiated a clean CR that funds the government until December 11. A budget deal that suspended the debt ceiling until March 2017 and provided two-year relief from sequestration and funding increases for defense and nondefense budgets was agreed to in late October, passed, and signed by the president.
The FY2016 Defense Authorization bill that aligned with the budget agreement was passed and signed by the president.
Congress passed and the president signed the Airport and Airway Extension Act of 2015 (H.R. 3614) that extended authorization for the Federal Aviation Administration until March 31, 2016.
House and Senate conferees have agreed to the “Fixing America's Surface Transportation (FAST) Act” that authorizes federal surface transportation funding for five years and includes reforms to transportation programs. The bill would also reauthorize the Export-Import Bank until 2019. The bill could go to the president as early as Friday.
With this success behind them, Congress now faces the final push to complete what would be an impressive list of accomplishments.
With the Continuing Resolution (CR) set to run out in eight days, Congress must pass either a FY2016 Omnibus Appropriations bill or another CR by December 11 to avoid a government shutdown. The House and Senate have passed their versions of the FY2016 Military Construction/VA bill thus providing a vehicle for an Omnibus bill that includes all 12 appropriations bills. Committees have been working on reaching agreement on the other 11 appropriations bills and House and Senate leaders hope to have a bill complete by December 11, although another short-term CR may be needed to finish and get the bill to the president.
Of course, this optimistic sentiment is based on House Speaker Paul Ryan's (R-WI) ability to ensure that strong pressure from many Republicans to defund Planned Parenthood or other policy riders do not derail the negotiations. If an Omnibus bill defunded Planned Parenthood the president would surely veto it forcing a shutdown showdown, something few seem to want. Other potential “poison pills” that would force Democrat opposition is significant changes to Dodd-Frank or restrictions to immigration. There could also be a push from some defense hawks to increase defense funding above the amount set in the budget agreement.
Ryan's challenge is to provide supporters of Planed Parenthood defunding and other policy riders a way to address their concerns without forcing a government shutdown crisis.
Finally, in what has become an annual ritual, Congress will have to address some 50 expiring tax credits (so-called tax extenders) that will expire on December 31. These tax credits include individual tax deductions, business incentives (e.g. research and development credits), and energy tax credits. For a number of years Congress has routinely extended these tax credits for only a year. Congress will probably extend the credits through FY2016, although there is a strong push to make some extenders, such as he research and development tax credit, permanent. There is also a chance that a tax extenders bill could include a provision, pushed by Democrats, that would end or modify the so-called “Cadillac Tax.” This 40 percent tax on expensive health insurance plans, mostly offered by employers, is part of the “Patient Protection and Affordable Care Act,” and there is some concern that the president could veto the entire bill, if it makes significant changes to this tax.
The president had vetoed the bill agreed to by the House and Senate in October because it included $38 billion of base budget requirements in funding for Overseas Contingency Operations (OCO). The White House and most Democrats opposed this approach because they believed it circumvents the budget act to increase defense spending and could lead to significant cuts to nondefense programs.
The budget agreement provided relief from sequestration for both defense and nondefense budgets by providing an additional $80 billion equally divided between defense and nondefense in FY2016 and FY2017. In FY2016 the agreement raised the FY2016 defense budget by $25 billion and the OCO account by $8 billion.
After the president signed the budget agreement, the House and Senate passed by significant margins a revised defense authorization bill that aligned with the budget agreement and addressed the president's primary reason for vetoing the earlier bill.
In signing the FY2016 Defense Authorization bill the president said that “the Congress has now revised the National Defense Authorization Act to incorporate the new funding changes and has altered the funding authorization provisions to which I objected.”
The authorization bill provides almost $607 billion, including about $580 billion for total DoD, $18.6 billion for the Department of Energy (DoE) nuclear weapons program and $7.6 billion to meet the statutory requirements for DoD Concurrent Receipt payments. The bill includes a 1.3 percent military pay raise, reforms to military compensation and retirement, and significant reforms to defense acquisition.
However, the bill still includes a provision that prevents the transfer of prisoners from Guantanamo, which the president also strongly objected to in his earlier veto statement. In a statement accompanying his signing of the revised bill, the president expressed serious concern that that this provision and other provisions concerning detainee transfers “violate constitutional separation of powers principles.”
The president indicated that he would act unilaterally stating “in the event that the restrictions on the transfer of detainees in sections 1031, 1033, and 1034 operate in a manner that violates these constitutional principles, my administration will implement them in a manner that avoids the constitutional conflict.”
Federal workers can identify their political inclinations when using social media under revised guidance issued by the U.S. Office of Special Counsel.
The revised guidance, issued last week, addresses the Hatch Act restrictions and the use of social media and email, especially during the 2016 presidential election.
Under the Hatch Act, federal employees cannot engage in any political activity while on duty or in the workplace, engage in political in an official capacity, or solicit political contributions. In light of expanded use of social media in a worker's private and official time, the revised guidance clarifies federal workers' use of social media and email as it related to political activity.
The Special Counsel provides guidance in three areas relating to an employee's “Facebook” and “Twitter” account: the use of campaign logos, candidate photographs, and posts from a partisan group or candidate.
Federal employees will be allowed to “display campaign logos or candidate photographs as their cover or header photo situated at the top of their social media profiles.”
They can also “display campaign logos or candidate photographs as their profile pictures on their personal accounts.” However, they are not allowed when on duty or at the workplace “to post, “share,” “tweet.” or “retweet,” any items. Such action would show support for a particular group or candidate, according to the guidance.
“Further restricted employees” (mostly federal employees working in law enforcement or intelligence agencies) may “like” a post from a partisan group or candidate and can comment on a group's or candidate's page while not at work. However, these employees may not “like” at any time a post that solicits contributions
Even with this revised guidance, some situations are not clear cut for federal employees. For further information, employees can view the Frequently Asked Questions guidance referred to in the Special Counsel memorandum.
This week the Senate passed the FY2016 Military Construction(MilCon)/Veterans Affairs appropriations bill by a vote of 93-0. The House passed its version of the bill in April.
The bill provides $80 billion for FY2016 MilCon/VA discretionary appropriations, over $2 billion more than the bill approved by the Senate Appropriations Committee in May and $1 billion higher than the president's request.
Sen. Thad Cochran (R-MS), Chairman of the Senate Appropriations Committee (SAC), commending the bipartisan work of the committee and the full Senate, said the bill “is the first stand-alone appropriations measure amended, debated,and passed in the Senate since 2001. This year also marks the first time since 2009 that all 12 appropriations bills were approved by the Senate Appropriations Committee.”
This is the first FY2016 appropriations bill to pass in the Senate and also in both the House and Senate. The House has passed six FY 2016 appropriations bills but, until now, Senate Democrats have kept appropriations bills from coming to a vote on the Senate floor through procedural means. Last week they blocked consideration of the FY2016 Department of Defense Appropriations bill.
However, after a budget agreement was reached last month Senate Democrats now appear ready to move forward on FY2016 appropriations. However, because of concerns over possible policy riders (such as defunding Planned Parenthood) proposed by Republicans on separate appropriations bills, Democrats want to put all 12 appropriations in one omnibus appropriations bill. They supported the FY2016 MilCon/VA bill as a possible vehicle for such an omnibus bill.
Congress returns from the Veteran's Day recess next week with four weeks remaining until the Continuing Resolution (CR) funding the government expires (December 11). The question is: Can Republicans and Democrats agree on an omnibus appropriations bill in that time or will another CR be needed to provide time to reach agreement? Or will we be brought to the brink of government shutdown once again?
The ASMC National Achievement Awards nomination period is now open!
Any personnel in the -.3pt”> Department of Defense or the -.3pt”> United States mso-font-width:99%”> Coast Guard (to include National Guard or Reserve Components) may nominate a person or team who has demonstrated -.05pt”>outstanding performance, including exceptional achievements. If the nomination -.35pt”> is through an ASMC -.05pt”>Chapter, chapters must submit all qualified nominations received. Each nomination must be submitted via the ASMC Awards Online website by the published deadline. 1.75pt”>
More information about the nomination process is available here.
Today the House passed by a wide margin (370-58) a revised FY2016 National Defense Authorization bill that meets the parameters set out in the budget agreement.
The revised bill aligns FY2016 defense funding with the agreement by adjusting the total DoD amount downward by $5 billion.
The new bill provides almost $607 billion including about $580 billion for total DoD, $18.6 billion for the Department of Energy (DoE) nuclear weapons program and $7.6 billion to meet the statutory requirements for DoD Concurrent Receipt payments.
The new bill cuts added amounts in the original bill by almost $1 billion, including $250 million for Army readiness, $192.5 million for Army National Guard readiness, $150 million for the DDG-51, and $100 million for PAC-3 Missile Segment Enhancement. The bill also increase cuts made in the original by by over $700 million including $455 million more for planned DoD headquarters streamlining.
Additional reductions of $855 million include $262.5 million for Army civilian hiring targets, $100 million to classified programs, $90.1 million for unjustified growth in the Defense Information System Network, and $50 million for reduced THAAD purchases. The bill also increases cuts to fuel purchases by $1.1 million due to lower fuel prices.
The revised bill also reduces Overseas Contingency Operations (OCO) funding by $782 million, including a $250 million cut to the Counterterrorism Partnership Fund, $100 million to coalition support, and $125milion to the Syria train and equip program.
No other changes were made to the original bill. It still includes a 1.3 percent military pay raise, reforms to military compensation and retirement, and significant reforms to defense acquisition.
The House-passed bill still contains a provision that prevents the transfer of prisoners from Guantanamo. The White House had identified this provision as a reason for a veto threat of the earlier bill. In a press conference White House Press Secretary John Earnest did not rule out a possible veto of this biil because of the Guantanamo language, but did say that in any case the president was moving forward with a plan of action to close the prison.
Join the Office of the Under Secretary of Defense (Comptroller) at the next Reimbursable Work Orders Day on November 19, 2015, at the Mark Center in Alexandria, VA.
On November 19, 2015, OUSD(C) is hosting a Department-wide conference at the Mark Center in Alexandria, focused on the IPP-IGT initiative. Keynote speakers include Mr. Mark Easton (Deputy Chief Financial Officer, OUSD(C)), The Honorable Mr. Peter Levine (Deputy Chief Management Officer) and Ms. Debra Sonderman (Director, Office of Acquisition and Property Management and Senior Procurement Executive, U.S. Department of the Interior).
Learn more about the program here.
Busy month here at ASMC- as well, I’m sure, for each of you. Following are Happenings from ASMC HQ….
I am extending our Membership Renewal Campaign, which was due to end on 31 Oct until 30 Nov to provide more of you the opportunity to renew and be in a random drawing for a $50 Amazon gift card. Congrats to Agustin Santiago (Twin Cities Chapter) and Gavin Batchelder (Crown of Maine Chapter) who won Aug and Sep drawings. Renew your membership online by 31 Oct and by 30 Nov to be entered in the Oct and Nov drawings, respectively!
Just a reminder, please ensure you update your member profile here as changes (especially home or email address) occur in your contact info. Also, we’re working a programming change to enable you to update your chapter designation when you move to a job at another location and associate with the chapter there. No longer will you need to send a note to us at HQ asking us to do that for you. More to follow when we complete re-programming.
For those of you receiving hard copy of our Armed Forces Comptroller, our next edition should arrive in your mailbox by 16 Nov. Special thanks to those of you who elected to receive only the on-line edition, as that helps us with cost savings. Want to opt for the on-line edition, update your preferences in your member profile. (Once logged in, click “Update Profile” on the left, then scroll down to the bottom of the page.) Didn’t receive or have not had time to read the last issue? Read it online here.
Planning for PDI 2016 is already underway! We will convene in Orlando for this premier training event 1-3 June. I hope to see many of you there, as we’re lining up another great training and professional development event. We will post more info as we have it available at http://www.asmconline.org/pdi/. Missed PDI 2015? You can still obtain great training value by registering for Virtual PDI here.
CDFM training is conveniently conducted year-round with exclusive CDFM Refresher courses offered in two formats, Instructor-Led Classroom Training and Live Online Training. All CDFM Refresher Courses offered are aligned with the DoD FM Certification Program. Sessions are continuously updated and listed here. For DoD employees who wish to take advantage of the 5-day government-funded Enhanced Defense Financial Management (EDFM) Training Course, the schedule for FY2016 is posted on our website. Use the EDFMTC Automated Registration tool to register for this course. In addition, ASMC licensed vendors are also available to deliver the 5-day and other instructor-led courses at your chapter or organization. Click here to learn more about our education and training offerings.
Finally, as many of you already know, Ernest J. Gregory, a former Principal Deputy Assistant Secretary of the Army (Financial Management and Comptroller), past member of the ASMC National Executive Committee, and friend and mentor to many in the defense financial management community passed away on October 5, 2015 after a valiant three month fight against a brain tumor. Ernie is survived by his loving wife Johanna and his children Maura, Ernest Jr., and Jason. In tribute to Ernie’s exceptional legacy of contributions to our profession and to ASMC, our National Executive Committee honored Ernie by designating one of our premier annual national achievement awards in his name. I look forward to presentation of the “Ernest J. Gregory” Comptroller/Deputy Comptroller of the Year Achievement Award to its first deserving recipient at PDI 2016. Read more about Ernie’s career and also thoughts in memoriam to Ernie here.
Any questions – contact Kathryn R. Grandstaff-Bradford, our Associate Director for Communications and Public Affairs at firstname.lastname@example.org.
American Society of Military Comptrollers