The Pentagon has a safety cushion of $86 billion in cash it could shift to fund critical needs if Congress doesn’t raise the sequester spending caps.
Called “unobligated balances,” the funds are the amounts budgeted for the Defense Department that it stretches over more than one year, such as military construction, major weapons procurement programs and research.
Two-thirds of the department’s spending is done in one-year segments, such as operations and personnel. The Pentagon either spends all the money during the fiscal year or loses it. The remaining one-third funds the Defense Department’s procurement, military construction and research and development — the multi-year money where a potential cushion comes from.
But in the fiscal 2016 budget, the Defense Department estimates its spending accounts will have balances of:
• $8.4 billion in construction and land acquisition
• $55.8 billion in its procurement
• $13.4 billion in research
• $8.4 billion in miscellaneous
“I’m not sure I’d sign up for the word ‘cushion’ but it is a factor that’s taken into account,” as the agency looks at the harsh budget environment, said Defense Department Comptroller Mike McCord.
But the balances have limitations. For example, if the Air Force has a program with an unobligated balance, the department can shift the funds around – but only within the program. The funds could not be used to help the Navy, for example, nor could they be applied Air Force-wide, due to the legislative restrictions of the sequestration, McCord said.
In the past, service chiefs have asked that if sequestration caps aren’t lifted, that Congress at least remove some of the cap’s limitations, to give the Pentagon the authority to more broadly shift the spending between accounts. But there has been no appetite in Congress to give it that much leeway in how it spends its budget.
But there is enough flexibility in the language that a program manager could shift funds that were planned for a previous year to this year to keep programs going — unless Congress passes the current proposed budget from President Obama, which is $35 billion over the sequestration limits — without lifting the cap.
If the cap isn’t lifted, the automatic cuts known as sequestration kick in. This year, while the president’s budget request for defense is $534 billion, the spending cap under sequestration is $499 billion. The automatic cuts then take effect and cut an overall percentage from everything — even unobligated balances. So even the Defense Department’s potential cushion would take a hit.
