Transcript PEM 101: A Day in the Life of a PEM

Unclassified//FOUO
Headquarters U.S. Air Force
Integrity - Service - Excellence
Sequestration
101
Julie Hogan
SAF/AQPM
9 Jul 13
Unclassified//FOUO
1
Overview

Background
 Federal Budget Process
 Appropriation vs. Authorization
 Types of Funding
Do Ask Questions
 Continuing Resolution

Defense Budget

Budget Control Act

Sequestration
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Illustration
Do Take Notes
Ensure you claim CLP/CLU (8)
DO NOT FALL ASLEEP
2
President’s Budget (PB)
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Requests funds to run Government
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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
 Draft Bill
Committee Report
AUTHORIZATION
PROCESS
SASC
HASC
 Draft Bill
 Committee
Report
President’s Budget (PB)
Sent to Congress
in February
CONGRESS
 Draft Bill
 Committee
Report
SAC-D
HAC-D
APPROPRIATIONS
PROCESS
4
 Draft Bill
 Committee
Report
 Draft Bill
 Conf Report
 Bill as passed
• May include
amendments
AUTH
CONFERENCE
SENATE
Passes
DoD AUTH
BILL
CONGRESS
HOUSE
 Bill as passed
Passes
DoD AUTH • May include PRESIDENT
amendments SIGNS BILL
BILL
SENATE
Passes DoD
APPROP
BILL
HOUSE
Passes DoD
APPROP
BILL
 Bill as passed
• May include
amendments
DoD AUTH
LAW
 Draft Bill
 Conf Report
APPROPS
CONFERENCE
 Bill as passed
• May include
amendments
PRESIDENT
SIGNS BILL
CONGRESS
DoD APPROPS LAW
(FEDERAL BUDGET)
Authorization vs. Appropriation
Authorization
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Statutorily authorized
Provides permission & direction on
how to spend funds
Policy oriented
Fiscal Year focus
Extensive language
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)
5
Appropriation

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)
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
Request
I need $200
for a new
bike.
Appropriation
Authorization
O.K. But you
have to wear
a helmet.
You can
charge it
to us.
Obligation
Expenditure
SEARS
Bike
Outlay
1 $200.00
Aug 1997
Bank
$200
SEARS
Types of Funding
RDT&E
Procurement
MILCON
O&M
MILPERS
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

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Can last from a few days to several months
Restrictions under CRA


New Starts
Quantity Increases
8
How Big is the DoD Budget?
Some Issues
10

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?
Integrity - Service - Excellence
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

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)
Integrity - Service - Excellence
11
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
12
Typical Monthly
College Budget
Tuition
Housing
Food
Car
Insurance
Gas
Cell Phone
Entertainment
Savings
13
$1,000
500
400
200
175
100
50
50
25
$2,500
Integrity - Service - Excellence
10% Budget Reduction
Tuition
Housing
Food
Car
Insurance
Gas
Cell Phone
Entertainment
Savings
14
$1,000
1,000
500
500
400
340
200
200
175
100
100
70
50
25
50
10
25
5
$2,500 $2,250
Integrity - Service - Excellence
Sequestration (10%)
Tuition
Housing
Food
Car
Insurance
Gas
Cell Phone
Entertainment
Savings
15
$1,000
900
500
450
400
360
200
180
175
158
100
90
50
45
50
45
25
22
$2,500 $2,250
Integrity - Service - Excellence
Impacts
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16
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
Integrity - Service - Excellence
Air Force Impacts
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17
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
Integrity - Service - Excellence
Looking Ahead
18
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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
Integrity - Service - Excellence