The National Defense Authorization Act: A Mixed Message

When the 2013 budget proposal was released in February, Panetta made clear that the five-year plan that accompanied it was devised with a long-term aim at deficit reduction. The plan projected changes in force structure, including sizeable end strength reductions in the Army and Marine Corps, and an overall reduction in military assets – including the reduction of 303 Air Force aircraft, seven Navy Ticonderoga-class Aegis cruisers, and two amphibious dock landing ships (LSDs) – either through retirement or curtailed acquisitions.

The National Defense Authorization Act for FY 2013, finalized by House-Senate conference committee on Dec. 18, 2012, and signed by Obama on Jan. 2, 2013, authorized $633.3 billion total spending for defense, including $527.5 billion for the Pentagon base budget (about $2.1 billion higher than requested), $88.5 billion for OCO, and $17.4 billion for the national security programs in the Department of Energy and the Defense Nuclear Facilities Safety Board.

Noteworthy provisions of the authorization include:

• A limitation on the proposed end strength reductions for active Army and Marine Corps personnel.
  The law authorizes end strengths of:
  •Army, 552,100
  •Air Force, 329,460
  •Navy, 322,700
  •Marine Corps, 197,300
  The law explicitly prohibits the Pentagon from reducing the Army by more than 15,000 annually over the next five years; likewise, it limits annual reductions in Marine Corps personnel to 5,000. It also requires the secretary of defense, in consultation with the secretary of state, to develop and implement a plan to increase the Marine Corps Embassy Security Group by up to 1,000 personnel.
• A 1.7 percent military pay raise, effective Jan. 1, 2013.
• A curtailment of the sizeable proposed increases in enrollment fees and pharmacy co-payments for TRICARE, the health program for service members and retirees. The NDAA provisions represent a compromise, under which future fee and co-pay increases will be much lower than the Pentagon wanted. The law also limits future increases to TRICARE enrollment fees to no more than the annual cost-of-living adjustment  in military retirement pay.
  The DoD’s 2012 budget contained, for the first time since the 1995 establishment of TRICARE, a modest increase in the enrollment fee for TRICARE Prime, the military’s HMO-style health insurance plan for retirees under 65.
• A restriction on the powers of an independent commission, proposed by the Pentagon, to examine military retirement pay and develop ideas to reform the system. The Pentagon, in the face of political reluctance to make cut military pay and benefits, proposed giving this commission fast-track authority, in the fashion of the Base Realignment and Closure (BRAC) Commission, to save money and reform a system that benefits only service members who have served at least 20 years. This authority would allow Congress only an up or down vote on the commission’s recommendations, without the ability to make any alterations. The NDAA approved the commission, but removed its fast-track authority.
• The prohibition of retiring or inactivating any Navy Ticonderoga-class guided-missile cruisers or LSDs in 2013. The Navy wished to retire the older ships to avoid costly upgrades, but Congress says the ships have at least a decade of lifetime remaining.
• A prohibition against funding the deactivation of any of the Navy’s ballistic missile submarines (SSBNs). The law requires the Navy to maintain a minimum fleet of 12 SSBNs.
• An  increase in the number of DDG-51 Arleigh Burke-class destroyers, from nine to 10 ships, that can be purchased under the Navy’s multiyear procurement contract.
• An identical increase in the number of Virginia-class submarines (from nine to 10) the Navy can buy with multiyear contracts.
• A halt to the Air Force’s scheduled retirement of 27 Lockheed C-5A Galaxy heavy-lift transports, used by the Air Force Air National Guard and Reserve, until the department completes a comprehensive study of air mobility needs. The Air Force had planned to operate a mix of modernized C-5M “Super Galaxy” transports and the newer Boeing C-17 Globemaster IIIs.
• A compromise to the controversial plan to retire the military’s Joint Cargo Aircraft, the Alenia C-27J Spartan medium-lift transport. The Air Force explained its plan to phase out the aircraft – which debuted in Afghanistan in August 2011 – by calling it an unaffordable luxury. Aircrews from the Army National Guard and Air National Guard, however, have maintained that the C-27J can transport smaller cargo more cheaply and on smaller, unprepared runways than the larger Lockheed Martin C-130J aircraft, while freeing up CH-47 Chinook helicopters for troop transport. The NDAA mandates that the Air Force maintain 32 additional medium-lift transports, to satisfy the Army’s theater lift requirements – but it also gives the Air Force final authority to determine whether the additional aircraft will be C-27Js or C-130s.
• A compromise on the Air Force’s related plan to cut 196 aircraft and 7,500 personnel from the Air National Guard. For FY 2013, this requires the service to retain 106 aircraft and about 5,400 personnel in the Air National Guard.
• Full funding for the Army’s proposed next-generation Ground Combat Vehicle plans, and $135 million more than the Pentagon requested for additional M1 Abrams tank upgrades.
• Termination of funding for the Medium Extended Air Defense System (MEADS), the NATO-managed mobile air defense system originally designed to replace the aging Patriot missile system in the United States and Germany, where it would also replace the even older Hawk missile system, as well as Italy’s ancient Nike Hercules system. This provision was included despite the administration’s threat, citing jeopardized relations with Germany and Italy, to veto the bill if it were included. MEADS has been troubled by cost overruns, delays, and critical evaluations by both the Congressional Budget Office (CBO) and the Government Accountability Office (GAO).
• An order to the director of the Missile Defense Agency to select at least two East Coast sites suitable for a ground-based missile defense system to shield the Eastern Seaboard from intercontinental ballistic missiles (ICBMs), along with $100 million to fund the selection study. Such a shield – unmentioned by the Pentagon in its proposal – would cost billions of future dollars if implemented. An East Coast missile defense shield would be the third ground-based system in the nation, adding to existing interceptor systems in Alaska and California.

In mid-December, as the House of Representatives was preparing to vote on whether to send its version of the bill to conference, Panetta sent a letter to Carl Levin, D-Mich., and John McCain, R-Ariz., the chair and ranking member, respectively, of the Senate Armed Services Committee. In the letter, Panetta urged lawmakers to strip the bill of what he considered needless spending provisions. “The House and Senate bills,” he wrote, “include provisions that would divert $8 billion in FY 2013 and $74 billion over the next decade to unnecessary programs and activities, undermining our ability to execute the new defense strategy, and threatening our military readiness.”

In a list of concerns attached to the letter, Panetta made particular note of the East Coast missile shield, which he called premature: “The administration has not identified a requirement for a third U.S.-based missile defense site, nor assessed the feasibility or cost in a cost-constrained environment,” he wrote.

A little more than two weeks after the secretary’s admonishment that Congress had bloated the 2013 budget by $8 billion, Congress passed the NDAA and the American Taxpayer Relief Act – whose provisions, while delaying the immediate threat of sequestration, still included a possible sequester in March 2013 that would chop nearly 9 percent – $48.1 billion – from a 2013 budget not yet appropriated by Congress, and trigger $500 billion in defense cuts over the next decade.

Panetta, like many observers, seemed puzzled by the simultaneous passage of these two laws. On Jan. 10, he held a press conference with Army Gen. Martin Dempsey, chairman of the Joint Chiefs of Staff, in which they addressed the threat of sequestration. “We are seeing the formation of what I would call a perfect storm of budget uncertainty,” said Panetta. “We really have no choice but to prepare for the worst.”