Pentagon eyes $468.9 bln budget for fiscal 2008

By Andrea Shalal-Esa and Jim Wolf
Fri Dec 15, 2006 9:06pm ET

WASHINGTON (Reuters) - The White House has approved a fiscal 2008 budget request of $468.9 billion for the Pentagon, $4.7 billion more than expected last year, according to a memorandum obtained by Reuters.

It is also asking the Pentagon to cover some Army and Marine Corps war costs in Iraq and Afghanistan as part of the regular budget, rather than through emergency budget requests.

Deputy Defense Secretary Gordon England welcomed the topline budget increase in a memorandum to Rob Portman, director of the White House Office of Management and Budget.

But he strongly objected to OMB's orders that "costs to accelerate Army and Marine Corps combat and combat support units, Army Force Readiness and replacement of additional aircraft losses" should be funded as part of the 2008 budget.

England said that violated the Pentagon's earlier agreement with the White House that the extra spending would be used to cover Army budget shortfalls, and that war costs would continue to be funded through supplemental budgets.

The Bush administration is continuing to discuss budgets with various government agencies, including the Pentagon, and will submit a fiscal 2008 budget to Congress in February.

"The inconsistency ... is that adding war costs in the budget would effectively negate the prior agreement for a topline increase," England said in the December 14 memorandum.

Offsets proposed by White House budget officials would "significantly weaken the department's strategic position" and jeopardize the Pentagon's joint warfighting concept, he said.

England did not give details on the proposed offsets.

However, he said the Pentagon's initial budget proposal -- before the suggested offsets -- was based on thousands of hours of work, and the best judgment by senior military and civilian leaders. "It is balanced and provides for our nation's defense at a time of diverse and dramatic threats," England said.

U.S. lawmakers have grown increasingly frustrated about the Pentagon's use of supplemental budgets to fund war costs, given that the costs are no longer "unanticipated," said Steven Kosiak with the Center for Strategy and Budgetary Assessments, a Washington-based research group.

But he said lawmakers wanted more oversight of that spending than permitted in the supplemental budgets, and there was no suggestion that they would curb funding for the war.

"They would like the administration to ask for most of the funding up front," he said.

Kosiak also rejected England's statement in the memo that the 2008 increase "reverses a trend of declining real growth," calling England's description "flat-out wrong."

"There has been a upward trend in real terms, above the rate of inflation," he said, citing a 23 percent real increase, above inflation, in the Pentagon's budget from 2000 to 2007.

The Pentagon is likely to ask for an additional $100 billion to fund the Iraq and Afghanistan wars early next year.

Amy Belasco, a defense budget analyst for the Congressional Research Service, said the Pentagon's 2008 topline budget request of $468.9 marked a sharp increase from its fiscal 2007 budget request of $441.2 billion.

Last February, when the White House sent its 2007 budget request to lawmakers, the Pentagon anticipated a 2008 budget request of $464.2 billion, she said.