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US Special Operations Command. The “New” Fiscal Environment (The anticipated fiscal environment) ASMC Luncheon September 2009. Mr. Mark Peterson U.S. Special Operations Command Chief Financial Officer/Comptroller. The overall classification of this briefing is: Unclassified. Ver 4c. - PowerPoint PPT Presentation
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The “New” Fiscal Environment
(The anticipated fiscal environment)
ASMC Luncheon September 2009
Mr. Mark Peterson
U.S. Special Operations Command
Chief Financial Officer/Comptroller
The overall classification of this briefing is:
Unclassified
US Special Operations CommandUS Special Operations Command
Ver 4c
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The Economy is a National Security Issue 2
The Future has arrived (Sooner than expected !)
David WalkerGAO Comptroller General
Nov 98 – Mar 08
"I would argue that the most serious threat to the United States is not someone hiding in a cave in Afghanistan or Pakistan but our own fiscal irresponsibility.”
CBS 60 Minutes, March 2007
“The fiscal wake-up tour”
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The Fiscal Environment
Federal
Department of Defense
The New Administration
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THE FEDERAL VIEWTHE FEDERAL VIEW
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The United States Constitution entrusts the `power of the purse' to the Legislative Branch of the United States.
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• Article I, section 8: Congress is empowered “[t]o lay and collect Taxes, Duties, Imports, and Excises to pay the Debts and provide for the common Defense and General Welfare of the United States.”
• Article I, Section 9: “[n]o money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.”
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2009 Federal BudgetDiscretionary vs. Entitlement
Sixty-two percent of the Federal Budget is mandatory spending (including interest)
DOD Budget is more than 56% of all Federal discretionary spending----------------------------
Some parts of DoD “Discretionary” spending acts like an “entitlement” (e.g., Military Health Care and Retirement)
Source: FY 2009 Budget of the United States Government
Approximately $3 Trillion Dollars
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The Fiscal Environment(Historical View compared to GDP)
4% GDP $568B
Do
wn
ward
Pres
sure
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Key Players in the Federal Discussion
“Peter has been one of our nation’s leading voices on budgetary issues…he doesn’t need a map to tell him where the bodies are buried in the federal budget. He knows what works, and what doesn’t.” President Obama commenting on Mr. Orszag as the new Director of OMB, November 25, 2008
Director of OMB Peter Orszag President Obama
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Project for National Security Reform (PNSR)
The Project for National Security Reform recently published its report highlighting the need for a “whole-of-government strategic planning document that outlines national objectives, priorities, and specific actions for improving interagency coordination and operational planning.
- Resource implications: Shift of DoD $$ to other Agencies
National Security Advisor James Jones
Dennis Blair & James Locher III
Key participants of the PNSR effort included retired Admiral Dennis Blair, Director of National Intelligence and retired General Jim Jones, National Security Advisor
“Our country is wearing concrete shoes in a security environment that demands speed and agility. The need for fundamental reform is urgent and the consequences of inaction are dire.” James Locher III, PNSR Executive Director
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Fiscally speaking: we are in “uncharted” waters as a nation 9
Federal Summary
The National Economy is a National Security Issue
Wake-up call came early: Recession and failure of the mortgage and banking industry. Unemployment will continue to rise.
Short Term: The domestic economy will take priority over all other funding issues in the Federal Government. All Budget decisions will be heavily influenced by the Recession Next major issue will be the FY 2011 President’s Budget (How much can
we afford for Defense - -and what kind of Defense?) Anticipate a historic Budget fight for PB-2011 as Agencies wrestle over
scarce dollars
Long Term: Entitlement spending must be addressed. Health care reform will be initial focus with tax increases and “means testing” an inevitable part of the equation (personal opinion).
Funding the “full instruments of national power” for security issues will be a theme in the FY 2011 President’s Budget
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THE DEPT OF DEFENSE VIEWTHE DEPT OF DEFENSE VIEW
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President Obama meets with the Chairman of the Joint Chiefs of Staff and the Service Chiefs on January 28, 2009.
“It’s bad….but not nearly as bad as the economy”
- Informal remarks by President Obama after receiving briefs on the current situation in Iraq and Afghanistan with the Joint Chiefs of Staff. ‘Meet the Press’ 2/2/09
President meets with Senior military leaders
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FY 2010 DoD Budget(Current dollars in Billions)
Source: DRDW Warehouse Database FY 2001 – FY 2011, Government Accounting Office FY 2001- 2009 GWOT
GWOT Request Information Database (GRID), FY11 Request in PresBud “The New Era” Feb 2009
Numbers may not add due to rounding
DoD Base Budget & Non-GWOT Supps.
GWOT FundingPBR 11 Position
Totals
Base FY 2001 – FY 2009 3,639
GWOT FY 2001 – FY 2009 884
Enacted Total 4,519
FY 10 / 11 OCO Request
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04/21/23 06:54 AMDRAFT PRE-DECISIONAL13
DoD Top-Line BudgetDoD Top-Line Budget1948 – 20101948 – 2010
250
500
750
1948 1958 1968 1978 1988 1998 2008
(FY 2009 $ in Billions)
(FY 2009 Constant Dollars in Billions)
Notes: FY 1949 – 2010 data includes supplementals, as applicableSource: Department of Defense National Defense Budget Estimates for FY 2008, Budget Authority in 2009 Constant Dollars
0
Korea
Vietnam
Reagan Build-Up
9-11, Afghanistan,
Iraq
Cold War Ends
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200
300
400
500
600
700
800
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Co
ns
tan
t F
Y 0
8 $
(B
illio
ns
)
Actual
President’s DoD Budget Submit with FYDP Projections
Supplemental/GWOT
Carter Reagan I Reagan II G. Bush Clinton I Clinton II G.W. Bush I G.W. Bush II
Fiscal Year President submitting budget
Obama
High Point
OverseasContingencyOperations
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Key DoD Leader perspectives
“We must have the courage to make hard choices. Any necessary changes should avoid across-the-board adjustments, which inefficiently extend all programs.” Secretary Gates testifying before the SASC on Jan 29, 2009. {Referring to FY-10 budget discussions and noting procurement and acquisition reform as one of the biggest challenges facing the pentagon}
Admiral Mullen, Chairman of Joint Chiefs of Staff
Robert Gates, Secretary of Defense
‘The global financial crisis is threatening U.S. security options abroad. The financial meltdown will force a delicate balance between national security and federal budgets.’ Paraphrased by USA Today, Feb 3, 2009
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“We’ve got to fund the wars we are in. The most expensive part of our budget is our people, and there isn’t a lot of flexibility with respect to people unless you start reducing forces.”Adm Mullen indicating that the procurement budget will likely be the bill-payer as the Department puts its PB-10 budget together.
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ASD SO/LIC&ICMichael Vickers
“Rebalancing the overall Defense portfolio to ensure that the joint force is as effective in irregular warfare as it is in traditional warfare requires focused efforts in three key areas:
(1) Growing SOF capacity while maintaining quality standards
(2) Reorienting general purpose force (GPF) capabilities toward irregular warfare while maintaining the capability of GPF
(3) Promoting increased integration between SOF and GPF”
Mr. Vickers congressional testimony before the HASC subcommittee on terrorism and unconventional threats and capabilities, February 2008
“The defining principle of the Pentagon’s new National Defense Strategy is balance. The U.S. cannot expect to eliminate national security risks through higher defense budgets…The military and civilian elements of the U.S. national security apparatus have responded unevenly and have grown increasingly out of balance.” - SECDEF SECDEF Gates from, “A Balanced Strategy: Reprogramming the Pentagon for a New Age” Foreign Affairs, Jan/Feb 2009
Key OSD Leader perspectives
SECDEF Gates andPrior SECSTATE Rice
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New Administration Transition Brief(Five primary cost drivers requiring attention)
Manpower & Entitlements Fully loaded personnel costs account for 50% of the DoD baseline
budget. Healthcare costs (for active duty and retirees) noted as rising at an unsustainable rate.
O&M costs continue to increase Improve supply chain and energy consumption
Excessive Overhead (tooth-to-tail ratio) – 42% rate Includes management functions, personnel support, central training –
considered to be “taxing combat capability.”
Force Structure/End-Strength Adjust force for new “strategic intent” Primary QDR issue – Ms. Flournoy Influence
RDT&E and Procurement Acquisition Reform (again) “Cannot reset force, modernize, and transform all portfolios” – tough
choices required
USD Policy Michelle Flournoy
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The economy and will drive a smaller DoD Budget 18
DOD Summary
Serious divestment discussion required (process used?) Greater accountability of resources (prior, current, future funds) Acquisition Reform will be highlighted (again)
Reduction in major procurement accounts “Hollow Force” versus “Smaller Force” ?
Preparation for a different kind of war (6 points) Influence the force structure through the next QDR What does “Rebalance” really mean? Affordability will be a major factor Interagency role will be revisited Role of Guard and Reserve forces Joint focus with serious look at “roles and missions”
– Interdependent to provide true joint capabilities
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Questions ?
BGEN Charles G. Dawes, General Purchasing Agent for the Army Expeditionary Force, testifying before Congress, 1921
“Sure we paid…we would have paid horse prices for sheep if sheep could have pulled artillery…It’s all right now to say we bought too much vinegar or too many cold chisels, but we saved the civilization of the world…Hell and Maria, we weren’t trying to keep a set of books. We were trying to win a war!”
You will always be asked to give an account of how you spent your funds