Leon Panetta puts the total operations budget shortfall at $11 billion. Army, Navy running over budget

Army and Navy operations spending for the first half of this fiscal year is running above the rate set by Congress — a budget decision approved by the White House but one that could make the remaining months that much harder without some relief from lawmakers.

An administration official confirmed to POLITICO on Monday that the two services — as well as the Marines to a much lesser degree — have been allowed to exceed their daily rate set under the continuing resolution that has governed governmentwide appropriations since Oct. 1.


All three services will face serious shortfalls if Congress decides to simply extend the CR through Sept. 30, the end of the fiscal year. And the fact that the military has spent more in the first half of the year only adds to the squeeze.

The CR sets an annualized rate for spending that is then apportioned by the White House budget office according to the length of the resolution — in this case 178 days or 48.77 percent of a full year.

In fact, the Army has been allowed to spend at a rate of 49.74 percent and the Navy as high as 52.36 percent. In the case of the Marines, the spend rate was 48.79 percent, an overrun equal to just a fraction of 1 percent. Alone among the four services, the Air Force rate of spending is under the CR daily rate, according to the administration’s data.

An administration official described the higher spending allocations as “ordinary exception apportionments” consistent with “long-standing practice and guidance.” But given the size of the defense budget, small percentage differences can add up to hundreds of millions, even billions of dollars. And this all comes in the context of automatic across-the-board cuts known as the sequester threatening to take effect March 1 that will severely affect the military.

The impact of the CR often gets lost in this politically charged standoff between President Barack Obama and House Republicans. But the CR has become almost a “second sequester” in operations accounts. The Army faces a potential $5.86 billion shortfall, the Navy $3.25 billion and the Marines $406 million.

Altogether, Defense Secretary Leon Panetta puts the total operations budget shortfall at $11 billion. This, combined with the March 1 cuts, could have a major impact on military readiness, and there is building pressure in Congress to reconsider the terms of the CR set to expire March 27.

One option favored by the leadership of the House and Senate Appropriations committees is to move ahead with a draft omnibus spending bill that would include updated numbers for defense. The Republicans have resisted this approach for months, but as the crisis builds, so has the pressure to act.

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