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Flournoy: No Quick Fix Likely to Pentagon Budget Woes

PARIS -- The former highest-ranking woman at the U.S. Defense Department who turned down the Pentagon's top job said there probably won't be a deal in Congress anytime soon to undo defense spending caps.

Michele Flournoy, the former undersecretary of defense for policy who now works as a senior adviser at Boston Consulting Group, was in town Tuesday to speak to a group of chief executive officers in the defense industry. During the day, she stopped by the Paris Air Show at the historic Le Bourget airfield outside the city to view the military aircraft on display and talk to crew members.

"I don't see an immediate deal," she said during an interview with, when asked about negotiations in Congress to undo or delay the across-the-board spending limitations known as sequestration.

Flournoy was widely rumored to be nominated for defense secretary after Chuck Hagel announced last fall that he would be stepping down. But she asked President Obama to take her name out of consideration due to "family concerns." Ashton Carter ended up taking the job. Flournoy remains active in defense policy as the head of the Center for New American Security, the Washington, D.C., think tank she co-founded.

The Pentagon requested $585 billion for fiscal 2016, which begins Oct. 1. That's about $35 billion higher than levels set in 2011 deficit-reduction legislation.

The Republican-led Congress has drafted a budget that would use emergency war funding to get around the spending caps on the base defense budget. The plan would shift much of the overage from the base budget into an account for military operations in Afghanistan and other overseas contingencies, as the so-called OCO account is exempt from the spending limitations.

Flournoy didn't describe the move as a "gimmick" as some in the Obama administration have, but she did point out that it comes with strings attached and fails to address the long-term problem of sequestration, which is on the books until 2023.

"It's better than having the base budget with no OCO," she said of the measure, which is still being debated on Capitol Hill. "But we shouldn't kid ourselves ... the additional OCO money only helps in certain areas like readiness. It does not help us in terms of our long-term modernization."

She added, "When you look at what's happening in the world, whether it's Chinese military investment, whether it's a resurgent Russia, whether it's the ISIL fight, we have a lot of pots that are boiling on the stove and we need to be investing to ensure we can take care of them in the future and we're not, frankly, doing that adequately right now." ISIL is another name for the Islamic State in Iraq and Syria.

Yet lawmakers, particularly those who serve on the defense committees, are increasingly aware of the growing risk to military training, readiness and procurement as a result of funding shortfalls, Flournoy said.

"I'm hopeful that in the next two to three years, we will come to our senses and conclude some kind of budget deal that allows us to spend what we should be spending on defense," she said.

Meanwhile, governments in Europe are divided on the issue of defense spending, Flournoy said. NATO countries are supposed to spend at least 2 percent of their gross domestic product on defense, but many fail to hit that target. By comparison, under President Obama, the U.S. defense budget would fall to 2.3 percent of GDP by 2024, according to the Council on Foreign Relations.

"There are some countries like Germany, Poland [and those in] the Baltics that are committed to increasing their defense spending somewhat, or maintaining it at a 2 percent level," she said. "And then there are others who really are not going in that direction, whose spending is either flat or declining. And the polling suggests that they don't really share the same threat assessment as us with regard to the threat that Russia may pose to NATO or to Europe. So I think it's a very mixed picture.

She added, "I think the real growth in defense markets is happening in Asia and the Middle East, more than in Europe or the United States right now."

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