I n t e g r i t y - S e r v i c e - E x c e l l e n c e

Headquarters U.S. Air Force

Unclassified//FOUO

Unclassified//FOUO 1

Julie HoganSAF/AQPM

9 Jul 13

Sequestration101

Overview

Do Ask Questions

Do Take Notes

Ensure you claim CLP/CLU (8)

DO NOT FALL ASLEEP

2

Background Federal Budget Process Appropriation vs. Authorization Types of Funding Continuing Resolution

Defense Budget

Budget Control Act

Sequestration

Illustration

President’s Budget (PB)

Requests funds to run Government Includes operations, research & development, procurement

Begins authorization and appropriations cycle Usually submitted to Congress First Monday in February

After State of the Union Address Explained to Congress through additional

documentation and hearings

How Defense Bills Become Laws: The Products

4

President’s Budget (PB)Sent to Congress in February CONGRESS SENATE

Passes DoD APPROPBILL

SENATEPassesDoD AUTHBILL

Bill as passed• May include

amendments

Bill as passed• May include

amendments

Bill as passed• May include

amendments

Bill as passed• May include

amendments

HOUSEPasses DoD AUTHBILL

HOUSE Passes DoD APPROPBILL

Final DoD Approps Bill

Final DoD Auth Bill

CONGRESS

CONGRESS

AUTHORIZATIONPROCESS

SASC

HASC

SAC-D

HAC-D

Draft BillCommittee Report

Draft Bill Committee Report

Draft Bill Committee Report

Draft Bill Committee Report

APPROPRIATIONSPROCESS

PRESIDENT SIGNS BILL

PRESIDENT SIGNS BILL

DoD AUTH LAW

DoD APPROPS LAW (FEDERAL BUDGET)

Draft Bill Conf Report

AUTH CONFERENCE

APPROPS CONFERENCE

Draft Bill Conf Report

Authorization vs. Appropriation

5

Constitutionally mandated Provides budget authority

Permission to draw funds from US Treasury

One-year budget focus Limited language Defense is only 1 of 12 Bills

SAC-D and HAC-D (D = Defense)

Statutorily authorized Provides permission & direction on

how to spend funds Policy oriented Fiscal Year focus Extensive language

Authorization Appropriation

Example: Mom, Can I go to the movies? “Yes, I approve (authorize) you to go, but you cannot see “Zombie Blood Bath” (Prohibitive content)

Authorizers: HASC & SASC(House Armed Services Committee & Senate Armed Services Committee)

Example: Dad, Can I have money to go to the movies? “Yes, here is $20 (appropriated).” (Cannot spend the $20 to see “Zombie Blood Bath” due to Prohibitive Content)Appropriators: HAC & SAC(House Appropriations Committee & Senate Appropriations Committee)

Real-life Definitions

O.K. But you have to wear

a helmet.

I need $200 for a new

bike.

RequestAuthorization

Appropriation

Obligation

OutlayExpenditure

SEARS$200.00

1 Aug 1997

$200Bank SEARSSEARS

Bike

You can charge it

to us.

SEARS

Types of Funding

RDT&E

ProcurementMILCON

O&MMILPERS

Incremental

Full

Annual

Continuing Resolution Authority (CRA)

Used by Congress to fund government agencies if a formal appropriations bill has not been signed into law by 30 Sep

Allows operations to continue until formal appropriation is approved Can last from a few days to several months

Restrictions under CRA New Starts Quantity Increases

8

How Big is the DoD Budget?

I n t e g r i t y - S e r v i c e - E x c e l l e n c e 10

Some Issues

How big should the defense budget be? Percent of gross domestic product? (currently ~4%) Percent of the budget? (currently ~20%)

How do we balance the budget? Raise taxes? Decrease spending?

Where should we cut defense? Cancel programs? Close bases? Reduce personnel/benefits?

I n t e g r i t y - S e r v i c e - E x c e l l e n c e

Budget Control Act

Enacted due to debt ceiling crisis

Reduces spending by $1.2 trillion over 10 years (2011-2021)

Discretionary spending is capped each year for next decade

11

Created “super committee” to make recommendations (tax increases & spending cuts) – failed

As a result, there is an across the board cut to eliminate excess spending (sequester)

12

Sequestration

Theory: “Meat-ax” approach to budget-cutting whose consequences were so dire Congress would not let it occur

Reality: It happened! Enacted 1 March 2013 (after extension) Drove $42.7B cut to DoD budget in FY13

I n t e g r i t y - S e r v i c e - E x c e l l e n c e 13

Typical Monthly College Budget

Tuition $1,000

Housing 500

Food 400

Car 200

Insurance 175

Gas 100

Cell Phone 50

Entertainment 50

Savings 25

$2,500

I n t e g r i t y - S e r v i c e - E x c e l l e n c e 14

10% Budget Reduction

Tuition $1,000 1,000

Housing 500 500

Food 400 340

Car 200 200

Insurance 175 100

Gas 100 70

Cell Phone 50 25

Entertainment 50 10

Savings 25 5

$2,500 $2,250

I n t e g r i t y - S e r v i c e - E x c e l l e n c e 15

Sequestration (10%)

Tuition $1,000 900

Housing 500 450

Food 400 360

Car 200 180

Insurance 175 158

Gas 100 90

Cell Phone 50 45

Entertainment 50 45

Savings 25 22

$2,500 $2,250

I n t e g r i t y - S e r v i c e - E x c e l l e n c e 16

Impacts

Tuition – Can’t take a class; may delay graduation Housing – Move to a cheaper place? Get a roommate? Food – Buy cheaper food; eat less Car – Can’t make car payment; defer oil change Gas – Consolidate trips; take bus Insurance – Cancel healthcare policy; assume risk Cell Phone – Use more inefficient processes Entertainment – Have less fun

I n t e g r i t y - S e r v i c e - E x c e l l e n c e 17

Air Force Impacts

Limit supply/IT purchases Defer building maintenance Cancel trips, conferences, training Cancel non-mission flying hours (e.g., airshows, flyovers) Fire temporary employees/impose hiring freeze Furlough civilians one day per week Cancel combat exercises Reduce weapon system sustainment Ground airplanes

I n t e g r i t y - S e r v i c e - E x c e l l e n c e 18

Looking Ahead

One time opportunity to move money between accounts Still waiting for Congress to approve the DoD request

If Congress can’t agree on budget this year, we will sequester again

Continue to trade modernization for readiness