Monday, March 17, 2008

Billions Over Budget,Years Behind Schedule

In addition to Ground Hog Day (February 2nd), early February of each year includes Budget Day (B-Day). A moveable feast (within limits), B-day sees the official public release by the White House of its proposed spending plan and anticipated revenue stream for the next fiscal year (which starts October 1st of the same calendar year as Budget Day).

Now this is but the opening gambit, a blueprint for essentially one year’s worth of proposed cash expenditures plus whatever amount has to be added to the debt because revenues don’t cover spending (or, as has been the case throughout the current president’s entire term in office, “supplemental” appropriations bills in the hundreds of billions of dollars have been used to skirt budget caps legislated by Congress.

Something else has happen each year: the federal budget has been moving more and more toward a bifurcated document roughly equal in value. On one side is the Department of Defense budget plus other military-related activities (chiefly in the Departments of Energy and State). On the other are all other activities of the federal government that are not mandatory under previous legislation (principally Medicare, Medicaid, and Social Security).

The Defense Department also prepares on an annual basis a “Selective Acquisition Report (S.A.R.), along with quarterly updates, to Congress on the status of expenditures and adherence to the timelines for manufacturing and fielding of a weapons platform (e.g., heavy bomber or Navy frigate). Since 1983, under the Nunn-McCurdy amendment to the 1982 Defense Authorization Act, any program whose cost estimate has increased by 25 percent from its original baseline is to be terminated.

How can the ordinary citizen learn if the law is being followed? One way is to attend budget hearings in late February and March. Another is to try to find a transcript on-line. Third, pick up some of the defense-trade weekly publications. These frequently have capsule updates of weapons status or even a half to a full page story.

For example, the March 17th print edition of Defense News had the following information:

The original estimated cost of 21 VH-71 helicopters for use by the president and the White House was $6.8 billion. The current estimate is $11.2 billion, up 61 percent caused by a dispute between the White House and the Air Force on handling the program.

Contracts for the Navy’s first two Zumwalt-class destroyers (DDG 1000) were let last month. The Navy estimates each of the first two ships will cost $3.3 Billion; outside experts say each will run closer to $5 billion. The original plan was to buy at least 30 of these destroyers as part of the Navy’s 30 year shipbuilding plan to reach 313 ships.

But the money to build seven DDG 1000s – the current number the Navy has settled on – and build other ships to meet the 313 goal simply doesn’t exist. Last month Navy officials said they could do both if they get $15.6 billion on average each year for the next six years ($93.6 billion). But last week the Congressional Budget Office told Congress the Navy would require $21 billion on average for the next six years ($126 billion) and $25 billion on average over the 30 year planning horizon.

Another major acquisition, the F-35 Joint Strike Fighter, is in trouble. In the last year, according to the Government Accountability Office, acquisition costs have increased $23 billion. Moreover, auditors have found that the original estimates of program costs were underbid to the tune of $38 billion. Add another $6.8 billion to develop an alternative engine to power the plane and suddenly the cost has gone up $67.8 billion. With anticipated time delays in development more than double what they were a year ago (12 to 27 months), the program almost certainly will exceed the current estimate of $337 billion for 2,458 airframes which itself is a 45 percent cost overrun of the baseline cost prediction of the program

The point of all this is that when we finally pull our troops from Iraq and Afghanistan, the Defense Department will be coming with hat in hand to Congress for at least as much money as it gets today in order to “rebuild” the armed forces back to what they were before the war. But will not the end of hostilities also provide a window of opportunity to press for a “bottoms-up” hard look at the Pentagon’s structure and determine not to rebuild what we had in 2001 but redesign the military by redefining its missions and, as the Army has just done, to bring its “core competencies” into line with the needs

But if this idea is to even have a chance, the agitation has to start now. March 19th, the fifth anniversary of George Bush's war, is quite apt.

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