John Conger recently reported in Defense One that the tax reform initiative championed by the Trump administration and Republican congressional leaders may torpedo an increase in the U.S. defense budget for 2018. Both the House and Senate have passed authorizations approving the Trump administration’s budget request for $574.5 billion in defense spending, which is $52 billion higher than the limit established by the Budget Control Act (BCA). However, the House and Senate also recently passed a concurrent 2018 budget resolution to facilitate passage of a tax reform bill that caps the defense budget at $522 billion as mandated by the BCA.
The House and Senate armed services committees continue to hammer out the terms of the 2018 defense authorization, which includes increases in troop strength and pay. These priorities could crowd out other spending requested by the services to meet strategic and modernization requirements if the budget remains capped. Congress also continues to resist the call by Secretary of Defense James Mattis to close unneeded bases and facilities, which could free spending for other needs. There is also little interest in reforming Defense Department business practices that allegedly waste $125 billion annually.
Congressional Republicans and Democrats were already headed toward a showdown over 2018 BCA limits on defense spending. Even before the tax reform push, several legislators predicted yet another year-long continuing resolution limiting government spending to the previous year’s levels. A bipartisan consensus existed among some armed services committee members that this would constitute “borderline legislative malpractice, particularly for the Department of Defense.”
Despite the ambitious timeline set by President Trump to pass a tax reform bill, the chances of a continuing resolution remain high. It also seems likely that any agreement to increase defense spending will be through the Overseas Contingency Operations budget, which is not subject to the BCA. Many in Congress agree with Democratic Representative Adam Smith that resorting to this approach is “a fiscal sleight of hand [that] would be bad governance and ‘hypocritical.’”
Are tax reform and increased defense spending incompatible? Stay tuned.
