OMB rejects Army bid for bigger share of 2008 budget

The Army has lost an extraordinary bid to capture a larger share of the fiscal 2008 Defense budget, with Office of Management and Budget officials agreeing to give the heavily deployed military service $121 billion next year -- nearly $18 billion below what senior officers say they need, several defense sources familiar with the negotiations said Wednesday.

Army Chief of Staff Peter Schoomaker has said that the service needs $138.8 billion next year to continue plans to transform the force and pay burgeoning personnel, operations and maintenance bills. Pentagon leaders issued fiscal 2008 budget planning guidance earlier this year that would have given the Army roughly $114 billion next year -- a figure that service leaders feared would not be enough to cover the Army's needs.

The Army already has had problems paying routine expenses at bases around the country, with a $500 million shortfall in installation accounts alone in fiscal 2006, congressional Democrats said recently. Base commanders have cut back on many standard services, including reducing mess hall hours and slashing funds for community centers and libraries.

Defense sources said those problems would only be exacerbated in fiscal 2008. The Army, one source said, needs, at minimum, $128 billion just to keep the lights on next year.

The budget crunch poses a difficult challenge for the Army, which spends more on personnel and operations costs than any other service. The Army cannot trim those areas, leaving officials with the option of slashing the service's prized procurement and research dollars. That could spell drastic cuts for the $160 billion Future Combat Systems -- the core of the service's modernization effort -- as well as efforts to transform Army brigades into smaller, more modular units.

But dramatically scaling back those programs would yield the Army less than $10 billion in fiscal 2008 -- not nearly enough to bridge the $18 billion budget gulf. House Armed Services ranking member Ike Skelton, D-Mo., said in an interview last week that he was uncertain how Congress would address any shortfalls in the Army's fiscal 2008 budget. "I do know the Army's stretched and strained," he said, adding that he is concerned about the service's readiness levels.

Army leaders historically have not clamored publicly for a larger budget share, fearing it would spark a funding war between the services. But Schoomaker, who is in his last year as Army chief, has taken the unusual step of waging his budget battle publicly.

Defense sources disclosed recently that the Army was negotiating its budget directly with OMB, rather than keeping discussions within the walls of the Pentagon. Army officials have said Defense Secretary Donald Rumsfeld still has been involved in those discussions with the White House.