At Defense, Hagel Would Face a Tough Task on Day 1: Handling Massive Spending Cuts

Chuck Hagel will likely get confirmed as secretary of Defense on Tuesday, with deep cuts to the Pentagon’s budget set to hit three days later.

After months of Defense Department officials forecasting armageddon and with Congress unable and unwilling to prevent the steep spending cuts, Hagel would be entering his new role in the middle of what some would call a crisis. With the United States drawing down troops in Afghanistan and attempting to solidify its new defense focus, how he handles the upcoming budget battles could define his tenure at the Pentagon.

“It took God seven days to make the earth and the skies,” said Gordon Adams, a professor of U.S. foreign policy at American University. “The chance of [Hagel] fixing the defense budget, which is probably a bigger conundrum than God faced, is small.” The massive cuts, known as the sequester, threaten to leave thousands of civilian workers with unpaid leave, military families without health care coverage, and dozens of ships from deploying to the most strategic parts of the globe.

Hagel not only has the cuts to deal with, but he also has a few other problems to manage: government funding that expires on March 27, a budget for fiscal 2014, and a rocky relationship with lawmakers on Capitol Hill.

His Options

Under sequestration, the Pentagon faces $1 trillion in cuts over the next decade, $45 billion just in the remaining months of this fiscal year. The across-the-board cuts affect every branch of the military—everything from contracts, to fixing ships, to training troops. But Hagel isn't without options.

One approach is to push Congress to pass what Todd Harrison, a senior fellow at the Center for Strategic and Budgetary Assessments, calls a reprogramming package. If passed by Congress, the measure would let Hagel protect certain areas where deep cuts would cause more damage. It would also allow him to kill certain programs if he wants. 

Take, for example, Tricare, the health care program for active and retired military personnel and their families. In the remaining months of the fiscal year, the Pentagon will have to cut $3 billion from the program. But what happens to the health care coverage for those people? Does the Pentagon deny care or not pay the health care providers?

“The secretary of Defense has very little—virtually no—discretion in how these cuts are applied,” Harrison said. “This is just an automatic, across-the-board thing. If he wants to have any control in how those cuts are targeted, he’s going to have to wrestle that back from Congress.”

But this type of request is unprecedented and outside of what is normally allowed, Harrison warned.

And Hagel has another way to shape the future of the Pentagon’s budget. It’s called the Quadrennial Defense Review and is a once-every-four-years outline of the department’s needs. The QDR has usually been written with little attention to resource limitations, which leads to increased budgets over time. But in an era when the prospects for ground wars are narrow and budget issues remain a top concern, Hagel could give a clear vision of what a budget-limited Pentagon would look like.

His Credibility

The irony for the former senator is that as Defense secretary he would need to mend his battered image with some of his former colleagues. If he wants any wiggle room in shifting cuts or averting even deeper reductions for the 2014 budget, Hagel has to start building those bridges once he takes the job, said Mackenzie Eaglen, a resident fellow at he American Enterprise Institute.

“Sen. Hagel is going to need to have an acute sense of self-awareness and recognize there’s blood on the floor after the nomination process with Capitol Hill—on the member level, on the staff level, and with both parties,” Eaglen said. “He has a credibility problem, he’s lacking in political capital, and he needs to rebrand his image as a thoughtful, prepared, and ready secretary. It’s that simple.”

That credibility issue could haunt Hagel early on, seeing as how Congress not only approves his department’s funding but also holds the key for Hagel controlling elements of the deep cuts.

He also comes into the job with limited experience when it comes to the Defense Department’s budget itself. As a senator, he sat on the Foreign Relations Committee, not on Armed Services—the committee that deals with the Pentagon’s budget. Add his previous comments that he felt the department’s budget was too “bloated,” and his critics have built up a case that he is simply not prepared for his upcoming task.

“He’s got to reinforce the idea—the exact opposite idea—that he really does intend to fight the sequester and maintain a strong defense,” said Dov Zakheim, who served in several Defense Department roles in Republican administrations since President Reagan was in office.

Even those who support President Obama are concerned for Hagel’s handling of the budget battles that lie ahead, which could serve as a distractor to some of the administration’s priorities: a renewed focus on Asia, the drawdown from Afghanistan, and the continued nuclear threats from Iran and North Korea.

“I think the real test of Hagel as a secretary of Defense is going to be his ability to deal with the budget and management challenges,” Adams said. “That’s the big test. The rest of it, everybody has to do anyway.”