Air Force Times
September 10, 2012
Budget Cuts Bear Down
As the specter of mandatory budget cuts totaling $500 billion within the Defense Department looms ever larger, the Air Force finds itself facing the possibility of dialing back its aircraft modernization plans and ditching older aircraft.
Lawmakers have until the end of the year to figure out how to cut $1.2 trillion from the deficit; otherwise DoD will face about $500 billion in automatic spending cuts known as sequestration.
The cuts, which would take place over the next decade, would be on top of the nearly $500 billion in cuts the military is currently contending with.
At his confirmation hearing in July, Chief of Staff Gen. Mark Welsh III said the cuts would hurt the Air Force’s ability to provide deployable units, train pilots for manned and unmanned aircraft and support counterterrorism missions.
“Of course, every modernization program is affected in a major way, especially some of the key ones that we are going to rely so much on here over the next 10 to 20 years as we try and populate the force with new capability we need,” Welsh said. “And I think the trade space will become readiness and modernization. That’s horrible trade space to be operating.”
Most Air Force aircraft are decades old, especially the bombers and tankers, and that is why the Air Force has made its top three procurement programs the F-35 Joint Strike Fighter, the KC-46A tanker and the Next Generation Bomber.
The Air Force had expected to start fielding the F-35 in 2016, but that is no longer certain, officials said. The first KC-46A tankers are expected to be completed in 2016, and the new bomber is expected to enter service in the mid 2020s.
Because it is harder to make cuts to operations and personnel than weapons systems, sequestration would hit the Air Force’s top procurement programs hard, said Richard Aboulafia, an analyst with the Teal Group in Fairfax, Va.
“While in theory sequestration cuts would hit across the board, the reality is that DoD will be able to shift funding, which would damage big ticket items like F-35, KC-46, and the Next Generation Bomber,” Aboulafia said in an email.
The Defense Department is limited in how much money it can transfer from one account to another, but there are ways around that restriction, he said.
“The cuts would hit numbers of F-35s, which would increase unit costs, which would damage the program,” Aboulafia said. “The situation with KC-46 would be similar, but since there’s a fixed-price contract for a large number of up-front planes, the mechanism for funding cuts is unclear. As for the bomber, development would be stretched out.”
The Air Force ultimately plans to buy 1,763 F-35s for an average cost of roughly $80 million per plane over the next 25 years, said Joe DellaVedova, a spokesman for the Joint Strike Fighter Program Office. The service also wants to buy 179 KC-46A tankers for a total projected cost of $5.1 billion.
Sequestration would also likely prompt the Air Force to reduce the overall size of its fleet because it needs to avoid having more aircraft than it can use, either because the planes are not airworthy or there just aren’t enough pilots to go around, said Peter Juul, an expert with the Center for American Progress.
“If sequestration happens, the Air Force will probably move to retire older aircraft that are more expensive in terms of both money and manpower to maintain,” Juul said in an email. “That likely means A-10s, C-130s, and older F-15s and F-16s will be on the chopping block.”
The Air Force attempted to cut five A-10 squadrons, one F-16 tactical squadron and one F-15 training squadron as part of its proposed fiscal 2013 budget, but lawmakers put up a ferocious resistance because most of those aircraft came from the Air National Guard and Reserve.
Both the House of Representatives and the Senate have taken measures to block the Air Force from retiring Guard and Reserve aircraft.
With fewer planes, the Air Force may have to consolidate active-duty and Reserve units, Juul said. It is unlikely that the service would try to consolidate Air National Guard units, considering how hard governors and state officials would fight for their local units.
The Air Force might follow the Army’s lead in reducing its force in Europe, he said.
“Given the ‘pivot’ to the Pacific, it’s unlikely PACAF will see major reductions in its overall fleet even if units might be reshuffled or aircraft types consolidated,” Juul said. “This is extremely speculative, but it’s possible that units in Europe could be drawn down significantly — similar to the reductions announced for ground forces — and replaced with rotating presence missions from the United States, similar to the F-16 and C-130 rotations to Poland that are scheduled to begin next year.”
Starting in 2013, F-16 and C-130 crews will visit Poland for one- or two-week training missions throughout the year.
If the automatic defense spending cuts do kick in, they would not cause programs to be canceled immediately, nor would they force base closures or lead to pay reductions or layoffs of military personnel, according to a report by the Center for Strategic and Budgetary Assessments in Washington.
But as many as 108,000 Defense Department civilians could lose their jobs after sequestration takes effect, the report says. And $3 billion in funding for military health care is at risk because the money does not come from military personnel accounts, which are exempt from the cuts.
If the powers at be decide to exempt the health care funding from sequestration, that $3 billion would have to come from somewhere else, such as military construction, research and development or procurement funding, said Andrew Krepinevich Jr., president of the Center for Strategic and Budgetary Assessments.
Another wrinkle is if sequestration makes it impossible for the Defense Department to pay contracts to industry, it will have to renegotiate the contracts, Krepinevich said.
“This could work very much to the government’s disadvantage,” he said. “For example, if it’s a firm fixed-price contract, it allows the vendor to renegotiate the terms and they could say, ‘Well look, if you really want this, the price is going to have to go up.’ This is not a very efficient way to run a railroad.”
Specific information about which units, aircraft and weapons systems is not currently available because the Defense Department is waiting for guidance from the Office of Management and Budget about how sequestration would be implemented, experts said.
“Until OMB provides final guidance about how sequestration would be enforced, no one can say with any degree of certainty that a specific weapon program will be cut more than any other,” Ben Freeman, a spokesman for the Project on Government Oversight in Washington, said in an email. “Thus, with all due respect to Gen. Welsh, he cannot know with certainty that sequestration will hinder units in the field of counterterrorism activity or every modernization program. Will some developmental programs be affected? Certainly. But, saying that ‘every program is affected in a major way’ is hyperbole that impedes rational debate of this issue.”
Air Force spokesman Lt. Col. Sam Highley declined to comment beyond what Air Force leaders have said about sequestration because the Defense Department “is not conducting planning related to sequestration”; however, the comptroller is preparing information for OMB’s upcoming report on how the cuts would affect the government as a whole.
OMB declined to say what data it asked the Defense Department to provide, deferring to a July 31 memo from OMB’s Acting Director Jeffrey D. Zients to all federal departments and agencies.
“In the near term, OMB will consult with you on such topics as the application to your agency’s accounts and programs of the exemptions from sequestration,” the memo says.
OMB is prepared to implement sequestration if Congress cannot find a way to trim $1.2 trillion from the deficit, Zients said at an Aug. 1 House Armed Services Committee hearing.
“We will be ready, but really that’s not where the energy should be spent,” he said. “The energy should be spent on passing balanced deficit reduction to avoid what everybody agrees is bad policy.”
With the end of the year approaching rapidly, the big question is whether Congress will find a way to avoid or delay sequestration — or whether they are willing to sail off the cliff.
Sen. Carl Levin, a Democrat from Michigan and chairman of the Senate Armed Services Committee, is optimistic that lawmakers can strike a deal to avoid the massive defense spending cuts.
“I believe we will avoid sequestration because 90 percent of Congress doesn’t want it to happen,” Levin said in a statement to Air Force Times. “It was intended to force action, and I believe it will.”
Both sides held “quiet talks” during Congress’ August recess, but it is unclear how far they got, said Anthony Cordesman, of the Center for Strategic and International Studies in Washington.
“There is every rational incentive to reach some form of compromise — if only in the form of a delay,” Cordesman said in an email. “This is, however, an election year, and if Obama is defeated, he could push the burden off on Romney and if he wins, the Republicans could push him into an immediate confrontation.”
Even if sequestration were to go into effect, the new Congress — and possibly the new president — could delay or kill the cuts in January, he said.
Others are not so hopeful.
Sequestration is law, and that means it will happen unless Congress acts, said Daniel Stohr, a spokesman for the Aerospace Industries Association.
“Given that the inability of this Congress to pass substantial legislation is exactly what brought us to this position in the first place, I’m not hopeful,” Stohr said in an email. “Couple that with the need to deal with a host of issues during any putative lame-duck session, and you don’t have a recipe for success.”
Experts agree there is little chance of any deal on sequestration before the elections in November.
Rep. Buck McKeon, the Missouri Republican who is chairman of the House Armed Services Committee, said as much during the Aug. 1 hearing after a congressman suggested making cuts to the military health care system, the nuclear stockpile and reducing the U.S. military’s presence in Asia and Europe.
“Many who are facing election in November who are in tighter races are not gonna step up and do that,” McKeon said.