Pentagon, White House still negotiating 2010 budget

WASHINGTON (Reuters) - White House and Pentagon officials on Tuesday said they were still debating the size of the fiscal 2010 defense budget, and whether to add funding for the wars in Iraq and Afghanistan in the base budget.

Lawmakers for years have urged the Pentagon to include war spending, which reached nearly $190 billion in 2008, in its base budget rather than submitting a series of separate funding requests that do not receive equal scrutiny.

The Obama administration gave the Pentagon a $527 billion limit, excluding war costs, for its base budget, said one White House Office of Management and Budget official who asked not to be named. That compares to $515 billion allocated for fiscal 2009, and does not include spending on nuclear weapons included in the Energy Department budget.

The $527 billion sum is about the same as the outgoing Bush administration had projected, the official said, but far below the $584 billion Defense Secretary Robert Gates and the military services had said they would need late last year, especially if some war spending shifted into the base budget.

“When that number came out, it was really a wish list. It hadn’t been cleared by the White House or the OMB,” said the OMB official.

The sides were engaged in “a healthy back and forth about resources and priorities,” said the official. The Obama administration is expected to present an overview of its fiscal 2010 budget request to Congress by the end of February.

That would be followed by submission of a far more detailed budget proposal in late March or early April, said the official. Congress then typically takes several weeks or months to finalize the annual budget for the Pentagon.

Pentagon spokesman Geoff Morrell called the process constructive and friendly, and said the economic crisis had worsened substantially since officials put together the higher budget estimate.

“The reality is, the economic situation has deteriorated dramatically since we undertook that exercise,” Morrell said. “We today can probably not be as ambitious as we were.”


He said Gates knew the Pentagon’s budget situation was more constrained now, and was “prepared to make hard choices.”

Gates told Congress in a letter dated December 31 that the wars would cost another $69.7 billion in fiscal 2009, on top of $65.9 billion already approved by Congress.

But that did not include $17.6 billion in estimated costs for items that have not yet been considered, including $5.5 billion for an expected force build-up in Afghanistan.

Those items would bring the total cost of the wars to $153.2 billion for 2009. U.S. war appropriations have risen from $107.6 billion in fiscal year 2005 to $187.7 billion in 2008, according to the Congressional Research Service.

The issue of how to account for war costs was still being actively discussed, said the OMB and Pentagon officials.

Defense consultant Jim McAleese predicted that at least some war funding would be wrapped into the base budget for fiscal 2010, and Gates could possibly get half the additional $57 billion in spending he and Joint Chiefs had been seeking.

In exchange, the Pentagon could agree to cut back its war spending requests for the remainder of 2009 and in 2010.

McAleese said including some war spending in the base budget would help Gates stabilize Pentagon spending at a higher level at a time when budgets were under increasing pressure.

About one-quarter to one-third of any extra funds added to the base budget would go for weapons or investment accounts, McAleese said, while the rest would pay for military operations and personnel.

Editing by Alan Elsner