Hagels Pentagon Plan Sets Up Confrontation With Congress

U.S. Defense Secretary Chuck Hagel outlined a five-year Pentagon budget proposal that calls for retiring older weapons, limiting military compensation and shrinking the Army, moves that will be resisted by lawmakers.

Pushback from Congress to the defense cuts released yesterday “may be less this year because the public is more war-weary and isolationist than they’ve been in decades,” said Ben Freeman, a defense analyst for the Washington-based Third Way. “But that doesn’t change the fact that politicians running in districts with a large military presence will do whatever they can to protect their constituents.”

In this congressional election year, that may be enough “to derail some of the reforms Hagel proposed,” Freeman, whose group says it promotes moderate policies, said in an e-mail.

Hagel, presenting his first defense budget since taking office last February, said his recommendations “favor a smaller and more capable force –- putting a premium on rapidly deployable, self-sustaining platforms that can defeat more technologically advanced adversaries.”

If adopted, Hagel’s proposals would benefit Northrop Grumman Corp. (NOC), maker of Global Hawk surveillance drones, and Lockheed Martin Corp. (LMT), whose F-35 Joint Strike Fighter was protected in the budget plan. Curbs on future purchases of Littoral Combat Ships would hurt Lockheed and Austal Ltd. (ASB)

In remarks at the Pentagon yesterday, Hagel proposed a budget of $496 billion for fiscal year 2015, in line with congressionally approved limits. He also called for a new round of military-base closings, cuts in subsidies for commissaries on bases and a pay freeze for flag and general officers.

‘Reject Outright’

Lawmakers may accept Hagel’s proposal to freeze pay for high-ranking officers “but members will reject outright the base-closure request, the commissary subsidy reduction and the plan to ask for a small contribution to service members’ housing allowances,” said Mackenzie Eaglen, a defense analyst for the Washington-based American Enterprise Institute, which favors increased defense spending.

“Unfortunately, he is no more likely to get to yes with Capitol Hill this year than his predecessors in recent years,” Eaglen said in an e-mail.

Hagel’s plan would reduce the Army by 6 percent to about 490,000 personnel by 2015 from about 522,000 today, accelerating by two years the Army’s plan to reach that total by 2017. Hagel’s proposal also calls for reductions to about 450,000 by 2019 -- 30,000 fewer than the active-duty force in September 2001 before the terrorist attacks on the U.S.

Levin’s ‘Tough Case’

Pentagon officials would have a “tough case to make” that the proposed Army cuts “are appropriate, that they will not affect morale, that they won’t affect recruitment, and will have a significant impact in terms of budget savings,” Senator Carl Levin, chairman of the Senate Armed Services Committee and a Democrat from Michigan, told reporters yesterday. The Defense Department also has to show how the plan will “protect modernization and readiness,” he said.

Hagel travels today to the Army’s Training and Doctrine Command at Fort Eustis and to Langley Air Force base in Norfolk, both in Virginia, to discuss his proposals with Army and Air Force personnel.

Hagel said yesterday that he accepted the Army’s proposal to terminate its Ground Combat Vehicle program and instead direct program funds toward “a next-generation platform.” General Dynamics Corp. (GD) and BAE Systems Plc (BA/) are developing competing versions of the combat vehicle.

Bomber, Tanker

The Air Force will get to continue developing a new bomber and a refueling tanker aircraft as well as the F-35, Hagel said. The service will seek $1 billion to design a new jet-engine technology that will produce “sizable cost-savings,” Hagel said.

If automatic budget cuts known as sequestration resume at full force in 2016, the Air Force would have to retire its entire fleet of KC-10 tankers, buy fewer F-35 jets and sustain 10 fewer Predator and Reaper drone patrols, Hagel said.

To pay for the programs and the new engine, the Air Force will shrink the size of its tactical air squadrons and completely eliminate its A-10 attack airplane fleet, to save $3.5 billion over five years, Hagel said.

The A-10, known as the Warthog, was built by Fairchild Republic and has been upgraded by Chicago-based Boeing Co. (BAC), Falls Church, Virginia-based Northrop and Bethesda, Maryland-based Lockheed.

Ayotte’s Opposition

While retiring an aging weapon may produce less opposition than canceling a new one, with its billions of dollars in contracts, older systems have constituencies too.

Senator Kelly Ayotte, a New Hampshire Republican, has led opposition to retiring the A-10, the plane her husband flew in combat missions during the Iraq war. Opposition to Hagel’s plans quickly surfaced yesterday in Tucson, Arizona, where Davis-Monthan Air Force Base serves as the primary training base for the A-10.

“It’s very serious,” as the cuts would leave a deep wound, Shirley Scott, Tucson’s vice mayor, told NBC News.

The Air Force also will retire its fleet of 50-year-old U-2 spy planes in favor of the Global Hawk drones made by Northrop, Hagel said.

The decision to depend on drones reverses previous attempts by the Pentagon to keep the U-2s. It comes as the Defense Department “has been able to reduce the Global Hawk’s operating costs,” Hagel said.

Northrop’s Lobbying

Northrop waged a two-year lobbying effort to stop the Air Force from retiring an early version of the Global Hawk.

The Defense Department had projected savings of $2.5 billion over five years from eliminating the Block 30 Global Hawk. For two years in a row, Congress rejected the proposal at Northrop’s urging.

The Pentagon won’t conduct negotiations to buy more than 32 Littoral Combat Ships, compared with the 52 originally proposed, Hagel said. Versions of the ship are made by Lockheed and Henderson, Australia-based Austal.

“I am concerned that the Navy is relying too heavily on the LCS to achieve its long-term goals for ship numbers,” Hagel said. The ship is intended to operate in a “relatively permissive environment,” and the Pentagon must “closely examine” whether the vessel “has the protection and firepower to survive against a more advanced military adversary and emerging new technologies, especially in the Asia-Pacific,” Hagel said.

Frigate Capabilities

Hagel said he has asked the Navy to design a “capable and lethal small surface combatant, consistent with the capabilities of a frigate.” The Navy must consider new designs as well as modifications to the current LCS design, Hagel said.

Current spending plans foresee the Navy keeping 11 aircraft carrier groups, Hagel said. “However, we will have to make a final decision on the future of the George Washington aircraft carrier in the 2016 budget,” he said.

If Congress doesn’t reverse sequestration by 2016, the George Washington would be retired before a scheduled overhaul, leaving the Navy with 10 carriers, Hagel said.

While reducing the size of the Army “entails some added risk if we execute extended or simultaneous ground operations, our analysis showed that this force would be capable of decisively defeating aggression in one major combat theater” in addition to defending the U.S. homeland and supporting air and naval forces, Hagel said.

If Congress doesn’t reverse the automatic budget cuts by 2016, active-duty Army “would have to draw down to an end-strength of 420,000 soldiers,” Hagel said.

Hagel said special operations forces will grow to 69,700 personnel from 66,000 today because they’re “uniquely suited to the most likely missions of the future.”

“The clear message” from Hagel’s proposal “is that if Congress chooses to ignore these reforms again, it will force additional cuts in training and modernization which will break faith with the troops,” said Todd Harrison, a defense analyst at the Center for Strategic and Budgetary Assessments, a Washington-based policy group.

To contact the reporters on this story: Tony Capaccio in Washington at acapaccio@bloomberg.net; Gopal Ratnam in Washington at gratnam1@bloomberg.net

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

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.