Budget Agreement Eases Pentagon's Sequester Pain

Sen. John McCain, R-Ariz. Sen. John McCain, R-Ariz. J. Scott Applewhite/AP

The two-year budget agreement is a positive development for defense watchers -- mitigating about half the sequester cuts expected to gouge the defense budget in fiscal year 2014.

The agreement, announced Tuesday night by Senate Budget Committee Chairwoman Patty Murray, D-Wash., and House Budget Committee Chairman Paul Ryan, R-Wis., would provide $63 billion in sequester relief over two years, split evenly between defense and nondefense programs. By some simple math, that leaves some $31.5 billion in sequester relief for defense over the two-year period.

The Pentagon was facing a roughly $52 billion cut from its $527 billion request in fiscal year 2014. Now, the budget agreement says defense discretionary spending would be set at $520.5 billion that year. That figure presumably includes the Department of Energy's nuclear-weapons programs, meaning the department will likely be working with closer to a half-trillion-dollars in funding in fiscal 2014 -- and, to do so, it has front-loaded most of the newfound sequester relief.

"This is a positive outcome for the military and in particular, for the defense industry," Lexington Institute Chief Operating Officer Loren Thompson told National Journal, "because it means the president's request for the Pentagon would only be cut by about 5 percent, where the caps would have put it $52 billion lower. What the sequester relief does is, in effect, reduce the cut to the Pentagon's base budget in half."

While the agreement doesn't stave off sequestration's impact on defense completely, Senate Armed Services Committee member Sen. John McCain, R-Ariz., said "it softens it." He confirmed that the sequester relief is "much more" in the first year of the two-year deal.

The implication of this uneven distribution in sequester relief means that fiscal year 2015 will see less extra money to play around with from this deal.

Thompson, however, cautions, "We shouldn't assume any of these agreements mean much beyond the year in which they are passed -- the 2014 number is the one that really matters. Who knows what will happen beyond the election?"

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