Pentagon Cuts Eased by $22.3 Billion Under Budget Deal

The U.S. Defense Department would get $22.3 billion in relief from spending cuts this fiscal year under the budget deal reached by congressional negotiators, according to aides to lawmakers and Pentagon officials.

The Defense Department would still face about $30 billion in cuts under the process called sequestration in the year that began Oct. 1, down from $52 billion previously required, according to the aides and officials, who asked not to be identified discussing details that haven’t been made public.

The proposal engineered by Democratic Senator Patty Murray of Washington state and Republican Representative Paul Ryan of Wisconsin would ease the automatic cuts in defense and domestic programs for two years, remove the risk of a government shutdown and cut the deficit by $23 billion.

Unlike stopgap spending legislation now in effect, the budget deal and appropriations measures that would follow would let the Department of Defense award new multi-year contracts to contractors, start new programs and increase the production rates for existing ones.

“While this agreement doesn’t solve every budget problem facing DoD, it will help address our military readiness challenge by restoring funding for training and procurement, especially in fiscal year 2014,” Defense Secretary Chuck Hagel said today in an e-mailed statement.

The House may vote today on the accord. Passage would send it to the Senate for a likely vote next week.

Under the plan, the Defense Department’s base budget, not including wartime spending, would be about $498 billion after the $22.3 billion in sequestration relief.

Spending Legislation

That’s still less than the Pentagon’s $527 billion budget request. The deal would require the Senate and House appropriations committees to act by Jan. 15 on spending legislation that fits within the new budget caps.

While sequestration called for across-the-board spending reductions, the budget deal would give the appropriations committees power to decide how to apportion relief and where to apply remaining cuts. That may set off intense lobbying by defense contractors and interest groups.

“This is partial relief from sequester, not a complete elimination,” Todd Harrison, a defense analyst for the Center for Strategic and Budget Assessments in Washington, said in an e-mail.

Even if the budget deal wins passage in Congress, “the appropriators have to come up with bills that fit within these budget caps,” Harrison said. “That’s going to be hard to do by Jan. 15.”

The $30 billion reduction the Pentagon still would face is less than the $37 billion that was cut in the previous fiscal year.

To contact the reporter on this story: Tony Capaccio in Washington at acapaccio@bloomberg.net

To contact the editor responsible for this story: John Walcott at jwalcott9@bloomberg.net

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