Tag Archives: Budget

U.S. Congress negotiators set spending plan to avert shutdown, bolster defense

The U.S. Capitol Dome is seen before dawn in Washington.

By Richard Cowan

WASHINGTON (Reuters) – Negotiators in the U.S. Congress reached a deal late on Sunday on around $1 trillion in federal funding that would avert a government shutdown later this week, while handing President Donald Trump a down payment on his promised military build-up.

The full House of Representatives and Senate must still approve the bipartisan pact, which would be the first major legislation to clear Congress since Trump became president on Jan. 20.

Prompt passage of the legislation was expected this week.

The funds, which should have been locked into place seven months ago with the start of fiscal 2017 on Oct. 1, would pay for an array of federal programs from airport and border security operations to soldiers’ pay, medical research, foreign aid, space exploration, and education.

“The agreement will move the needle forward on conservative priorities and will ensure that the essential functions of the federal government are maintained, said Jennifer Hing, a spokeswoman for Republicans on the House Appropriations Committee.

If it is not enacted by midnight Friday, federal agencies would have to lay off hundreds of thousands of workers and require many others to continue on the job providing law enforcement and other essential operations without pay until the funding dispute in Congress is resolved.

“This agreement is a good agreement for the American people  and takes the threat of a government shutdown off the table,” Senate Democratic leader Chuck Schumer said in a statement.

He said the measure would increase federal investments in medical research, education, and infrastructure.

House and Senate appropriators worked into the night to draft the legislation for lawmakers to review.

Republican Representative Jim Jordan, chairman of the conservative House Freedom Caucus, said he and other conservatives likely would not back the measure because it does not fulfill their promises to voters.

“I’m disappointed,” Jordan told CNN. “We’ll see how it plays out this week but I think you’re going to see conservatives have some real concerns with this legislation.”

A senior congressional aide said the Pentagon would win a $12.5 billion increase in defense spending for the fiscal year that ends on Sept. 30, with the possibility of an additional $2.5 billion contingent on Trump delivering a plan to Congress for defeating the Islamic State militant group.

Trump had requested $30 billion more in military funds for this year after campaigning hard on a defense build-up during the 2016 election campaign.

NO WALL MONEY

Several other important White House initiatives were rejected by the Republican and Democratic negotiators, including money for a wall on the U.S.-Mexico border that Trump has argued is needed to stop illegal immigrants and drugs.

Instead, congressional negotiators settled on $1.5 billion more for border security, including more money for new technology and repairing existing infrastructure, the aide said.

Trump, in excerpts from a CBS News interview to air later on Monday, said a separate infrastructure plan would come within three weeks.

The Trump administration had earlier backed away from a threat to end federal subsidies for low-income people to get health insurance through Obamacare, the program that Trump had pledged to repeal.

Republicans are struggling over a repeal and replacement plan for former President Barack Obama’s landmark healthcare law and it was unclear whether they would be able to bring such legislation to the House floor soon.

While Republicans control the House, Senate and White House, Democrats scored other significant victories in the deal.

Puerto Rico would get an emergency injection of $295 million in additional funding for its Medicaid health insurance program for the poor, according to the aide who asked not to be identified. The impoverished island, which is a U.S. territory, is facing a severe Medicaid funding shortfall.

Democrats also fended off potential cuts to women’s healthcare provider Planned Parenthood, while House Democratic leader Nancy Pelosi applauded a nearly $2 billion hike in funds for the National Institutes of Health this year.

Coal miners and their families facing the loss of health insurance next month would get a permanent renewal under the spending bill.

While Trump has urged Congress to impose deep cuts to the Environmental Protection Agency, most of its programs would be continued for at least the remainder of this year, according to the aide.

The House is likely to vote first on the package, probably early in the week, and send the measure to the Senate for approval before Friday’s midnight deadline.

If the legislation is enacted by week’s end, Congress would then have to begin focusing on a series of bills to fund the government at the start of the next fiscal year on Oct. 1.

(Additional reporting by Susan Heavey; Editing by Paul Tait and Chizu Nomiyama)

U.S. military leaders say budget woes will impact readiness

U.S. Army Chief of Staff Gen. Mark Milley, left, stands with China's People's Liberation Army (PLA) Gen. Li Zuocheng, right, during a welcome ceremony at the Bayi Building in Beijing, Tuesday, Aug. 16, 2016. REUTERS/Mark Schiefelbein/Pool

By Mike Stone

(Reuters) – U.S. military leaders told a congressional committee on Wednesday that their ability to prepare to counter adversaries such as Russia and China will be impaired if Congress does not provide certainty about their budgets.

U.S. Army Chief of Staff General Mark Milley showed his frustration following years of uncertainty by telling the House Armed Services Committee he would consider it “professional malpractice” if Congress fails to pass a budget.

Milley was among the four heads of the U.S. military services testifying to the committee on the potential impact of a continuing resolution, a stopgap funding measure Congress could extend if it does not pass the 2017 budget by the end of April.

Current Defense Department funding is set to expire on April 28. If a budget bill is approved, it would allow the military its traditional authority to start new programs and distribute money with relative autonomy.

President Donald Trump has proposed a $30 billion defense budget supplement which would take the base Pentagon budget for fiscal 2017 to $541 billion.

Milley said the Army’s basic training would stop by summer if Congress does not pass a budget and enters a full-year continuing resolution.

The Air Force’s General David Goldfein said units not actively preparing to go into conflicts could be grounded this summer.

For the Navy, a full-year continuing resolution would delay funding needed to complete delivery of several ships and prevent it from buying numerous new ships, Chief of Naval Operations Admiral John Richardson said, without specifying which ships.

The commandant of the Marine Corps, General Robert Neller,‎ said construction would be delayed on specialized amphibious warships that Marines use during operations.

In December, Huntington Ingalls Industries Inc. won a contract to design and build the USS Fort Lauderdale, an amphibious transport dock ship that would be used by the Marines.

Just before testimony began on Capitol Hill, an Air Force F-16 fighter jet crashed during a training mission just six miles (10 km) southwest of Washington’s Joint Base Andrews. The pilot ejected and suffered non-life-threatening injuries, the military said.

The crash was brought up by Goldfein as he expressed relief that the pilot was alright, but later during a discussion about the time and expense it takes to maintain the Air Force’s fleet of aircraft, which are on average 27 years old.

(Reporting by Mike Stone; Editing by Bill Trott)

Germany balks at Tillerson demand for more European NATO spending

U.S. Secretary of State Rex Tillerson shakes hands with NATO Secretary General Jens Stoltenberg. REUTERS/Yves Herman

By Lesley Wroughton and Gabriela Baczynska

BRUSSELS (Reuters) – Germany said on Friday that NATO’s agreed target spend of two percent of members’ yearly economic output was neither “reachable nor desirable”, countering Washington’s demands that European partners comply and quickly.

The United States provides nearly 70 percent of NATO’s budget and is demanding that all allies make clear progress toward the agreed target this year. Only four European NATO members – Estonia, Greece, Poland and Britain – have done so.

“Two percent would mean military expenses of some 70 billion euros. I don’t know any German politician who would claim that is reachable nor desirable,” Germany’s Foreign Minister Sigmar Gabriel said at the first NATO meeting attended by U.S. Secretary of State Rex Tillerson.

Tillerson, however, reiterated Washington’s demands and said the U.S. will push that agenda when NATO leaders meet on May 25 for the first top-level summit of the alliance. U.S. President Donald Trump will attend that meeting.

“Our goal should be to agree at the May Leaders meeting that by the end of the year all Allies will have either met the pledge guidelines or will have developed plans that clearly articulate how…the pledge will be fulfilled,” Tillerson said.

“Allies must demonstrate by their actions that they share U.S. governments commitment.”

In Berlin, German government spokesman, Steffen Seibert, said the government was committed to increasing defense spending and would continue to do so “because we know it is necessary and makes sense to further strengthen our armed forces”.

Members have until 2024 to comply with the spending target.

Tillerson did however offer assurances of Washington’s commitment to NATO, softening Trump’s stance.

Trump has criticized NATO as “obsolete” and suggested Washington’s security guarantees for European allies could be conditional on them spending more on their own defense. He has also said he wants NATO to do more to fight terrorism.

“The United States is committed to ensuring NATO has the capabilities to support our collective defense,” Tillerson said at the meeting in Brussels. “We will uphold the agreements we have made to defend our allies.”

NATO Secretary General Jens Stoltenberg said ties between European NATO members and the United States were “rock solid”.

He said the ministers would discuss “fair burden sharing to keep the trans-atlantic bond strong” and “stepping up NATO efforts to project stability and fight terrorism”.

Stoltenberg confirmed ministers would discuss national defense spending plans on Friday as the bloc seeks to respond to the new, harsher tone from across the Atlantic, which has galvanized European NATO allies.

Though Washington has also offered reassurances, Tillerson’s initial decision to skip his first meeting with NATO foreign ministers reopened questions about the Trump administration’s commitment to the alliance.

The meeting was later rescheduled and Tillerson was attending on Friday, though has not scheduled meetings with individual countries as is customary by the secretary of state during such a meeting.

(Additional reporting by Robert-Jan Bartunek; Writing by Gabriela Baczynska; Editing by Louise Ireland)

China’s 2017 defense budget rise to slow again

Soldiers of China's People's Liberation Army (PLA) march during the military parade to mark the 70th anniversary of the end of World War Two, in Beijing, China, September 3, 2015. REUTERS/Damir Sagolj/File Photo

By Michael Martina and Philip Wen

BEIJING (Reuters) – Defying pressure for a strong increase in defense spending, China said on Saturday its military budget this year would grow about 7 percent, its slowest pace since 2010.

Last year, with China’s economy slowing, the defense budget recorded its lowest increase in six years, 7.6 percent, the first single-digit rise since 2010, following a nearly unbroken two-decade run of double-digit increases.

With the administration of new U.S. President Donald Trump proposing a 10 percent jump in military spending in 2017, and worries about potential disputes with the United States over the South China Sea and the status of Taiwan, some in China had been pressing for a forceful message from this year’s defense budget.

This week influential state-run tabloid the Global Times called for a rise of at least 10 percent to deal with the uncertainty brought by Trump, and a retired senior general told Hong Kong and Taiwan media that 12 percent would be needed to match the U.S. rise.

“It’s not enough,” a source with ties to senior Chinese officers told Reuters. “A lot of people in the military won’t be happy with this.”

Parliament spokeswoman Fu Ying, who announced the increase, said defense spending would account for about 1.3 percent of GDP, the same level as the past few years.

The actual number for defense spending will be released on Sunday, when China’s largely rubber-stamp parliament begins its annual session.

China’s economic growth target for 2017 is expected to be lowered to around 6.5 percent from last year’s 6.5-7 percent when Premier Li Keqiang gives his work report to parliament.

Last year normally talkative military delegates to parliament largely declined to talk to foreign media about the slowing rate of military spending, saying they had been ordered not to speak to foreign reporters.

NERVES RATTLED

China’s military build-up has rattled nerves around the region, particularly because China has taken an increasingly assertive stance in its territorial disputes in the East and South China Seas and over Taiwan, which China claims as its own.

Taiwan’s defense ministry expects China to continue to strengthen its military, spokesman Chen Chung-chi told Reuters, while a senior official at Japan’s defense ministry said the spending rise was still large and lacked transparency.

Takashi Kawakami, professor of international politics at Japan’s Takushoku University, said the small rate of increase showed China was taking a cautious approach with the new U.S. government, especially as Presidents Trump and Xi could meet soon.

“There was a view that China would increase its defense budget in line with the rise of the defense budget in the United States. But the fact China kept it at this level means it’s in a wait-and-see mode regarding the Trump administration.”

Spokeswoman Fu dismissed concerns about China’s military.

“Look at the past decade or so; there have been so many conflicts, even wars, around the world resulting in serious, large numbers of casualties and loss of property, so many refugees destitute and homeless. Which one has China caused?” she said.

There are other concerns for China’s military, including how to deal with the 300,000 troops President Xi Jinping announced in 2015 would be cut, mainly by the end of 2017.

Last month Chinese military veterans demonstrated in central Beijing for two consecutive days, demanding unpaid retirement benefits in a new wave of protests highlighting the difficulty in managing demobilized troops.

“It’s not yet certain what is going to happen to these people, and the military is clearly hoping for more money to deal with them,” one senior Beijing-based Asia diplomat said before this year’s defense budget was announced.

The defense budget figure for last year, 954.35 billion yuan ($138.4 billion), likely understates its investment, according to diplomats, though the number is closely watched around the region and in Washington for clues to China’s intentions.

A 7 percent rise for this year based on last year’s budget would bring the figure to 1.02 trillion yuan, still only a quarter or so of the U.S. defense budget.

The White House has proposed a 10 percent increase in military spending to $603 billion, even though the United States has wound down major wars in Iraq and Afghanistan and is already the world’s pre-eminent military power.

(Additional reporting by J.R. Wu in Taipei and Nobuhiro Kubo in Tokyo; Writing and additional reporting by Ben Blanchard; Editing by Will Waterman)

U.S. reshaping budget to account for Russian military threat

Military officials gathered in Montana Air Base

By Andrea Shalal

SIMI VALLEY, Calif. (Reuters) – Russia’s increasing military activities around the world have unsettled top U.S. military officials, who say they are reshaping their budget plans to better address what they now consider to be the most pressing threat to U.S. security.

“Russia is the No. 1 threat to the United States. We have a number of threats that we’re dealing with, but Russia could be, because of the nuclear aspect, an existential threat to the United States,” Air Force Secretary Deborah James told Reuters in an interview at the annual Reagan National Defense Forum.

James, Chief of Naval Operations Admiral John Richardson and Pentagon chief arms buyer Frank Kendall, all voiced growing concern about Russia’s increasingly aggressive behavior in interviews late on Saturday.

Their comments come as the Pentagon finalizes a classified security assessment for President-elect Donald Trump, who has promised to both pump up U.S. defense spending and build closer ties to Russian President Vladimir Putin.

European diplomats fear Moscow could use the time before Trump’s inauguration to launch more offensives in Ukraine and Syria, betting that President Barack Obama will be loathe to response forcefully so soon before he hands off power on Jan. 20.

Kendall said U.S. policy had been centered on threats in the Asia-Pacific region and Middle East, but was now focused more on Russia. “Their behavior has caused us … to rethink the balance of capabilities that we’re going to need,” he said.

None of the officials gave details about how the concerns would affect the fiscal 2018 budget request, but defense officials have pointed to the need to focus on areas such as cyber security, space, nuclear capabilities and missile defense, where Russia has developed new capabilities in recent years.

Pentagon officials have nearly completed work on a fiscal 2018 budget request, but it is likely to be reworked substantially once Trump takes office. Officials expect that budget to be submitted in April at the earliest, and possibly later. Typically, budgets are submitted in early February.

Marine Corps General Joseph Dunford, chairman of the Joint Chiefs, told the conference that Russia’s goal was to counter NATO, undermine its credibility and limit the ability of the U.S. military to project power around the world.

“They are operating with a frequency and in places that we haven’t seen for decades,” he said, adding that the buildup should be viewed in the context of its actions in Ukraine, Crimea and Syria, where they have already stepped up air attacks on eastern Aleppo.

Richardson said the Navy was seeing increased Russian naval activities around the globe, including its unprecedented deployment of a carrier strike group to the Mediterranean, the firing of missiles from ships in the Caspian Sea, increased submarine activities in the north Atlantic, and a growing naval presence in the Pacific.

He said there were continuing incidents involving Russian aircraft buzzing U.S. vessels, with some coming as close as 30 feet, and other cases where ships were behaving “erratically.”

“It’s all for public consumption,” Richardson said, noting that Russian ships often filmed such encounters and edited them to make it appear as if U.S. ships were at fault.

Russia and the United States have an agreement to limit and discuss incidents at sea, but the accord appeared to be having little impact on curbing such incidents, he said.

Dialogue between U.S. and Russian navy officers has ceased since Russia’s annexation of the Crimea region of Ukraine in 2014, in contrast to the days of the Cold War, when U.S. and Russian officials were in more regular contact, he said.

“More communication with Russia would be a valuable thing,” Richardson said, noting that he had regular contact with his counterpart in China, but not with those in Russia or Iran.

James echoed his concerns, citing what she called “very worrying” incidents of “very dangerous airmanship” and cyber attacks by Russian hackers on U.S. institutions.

Richardson also said he was concerned about a report by Norwegian Defense Minister Ine Eriksen Soereide that Russia now had the ability to cut off resupply routes to Europe through its activities in the Arctic region.

Army Secretary Eric Fannning told a panel at the conference that Russia was clearly acting “in a destabilizing way,” and said the United States was learning from how the Russian military was behaving in Ukraine.

(Reporting by Andrea Shalal; Editing by Alan Crosby)

U.S. health officials outline Zika spending priorities

County vector sprays neighborhood for mosquitos with Zika

WASHINGTON (Reuters) – U.S. health officials outlined on Tuesday how they planned to divide up $1.1 billion in funds approved by Congress to fight the Zika virus, including repaying $44.25 million they were forced to borrow from a fund allocated for other emergencies.

The funds were borrowed from the Public Health Emergency Preparedness cooperative, which helps state and local public health departments develop response plans to emergencies, while Congress battled over whether to supply the funds.

President Barack Obama in February requested $1.9 billion in emergency Zika funding. Congress approved $1.1 billion in September after months of political bickering.

On a conference call with reporters, health officials said$394 million would go to the U.S. Centers for Disease Control and Prevention, $152 million to the National Institutes of Health and $387 million for the Public Health and Social Services Emergency Fund, which supports the nation’s ability to respond to public health emergencies.

A further $40 million is aimed at expanding primary healthcare services in Puerto Rico and other U.S. territories, and $20 million for projects of national and regional significance in those areas.

Puerto Rico has been particularly hard hit by Zika, a mosquito-borne virus that has been linked with a rare birth defect known as microcephaly. The virus has spread to almost 60 countries and territories since the current outbreak was identified last year in Brazil.

As of Oct. 12, more than 29,000 cases of Zika infection had been reported in the United States and territories. Of those, more than 2,600 cases are in pregnant women. Nearly 26,000 of those cases are in Puerto Rico and other U.S. territories.

The government will be allocating funds, based on a competitive process, to support Zika virus surveillance and other programs. The funds will also be used to expand mosquito control, continue vaccine development and begin studies on the effect of Zika on babies born to infected mothers.

(Reporting by Toni Clarke in Washington; Editing by Peter Cooney)

U.S. Army fudged its accounts by trillions of dollars, auditor finds

U.S. army soldiers are seen marching in the St. Patrick's Day Parade in New York, March 16, 2013

By Scot J. Paltrow

NEW YORK (Reuters) – The United States Army’s finances are so jumbled it had to make trillions of dollars of improper accounting adjustments to create an illusion that its books are balanced.

The Defense Department’s Inspector General, in a June report, said the Army made $2.8 trillion in wrongful adjustments to accounting entries in one quarter alone in 2015, and $6.5 trillion for the year. Yet the Army lacked receipts and invoices to support those numbers or simply made them up.

As a result, the Army’s financial statements for 2015 were “materially misstated,” the report concluded. The “forced” adjustments rendered the statements useless because “DoD and Army managers could not rely on the data in their accounting systems when making management and resource decisions.”

Disclosure of the Army’s manipulation of numbers is the latest example of the severe accounting problems plaguing the Defense Department for decades.

The report affirms a 2013 Reuters series revealing how the Defense Department falsified accounting on a large scale as it scrambled to close its books. As a result, there has been no way to know how the Defense Department – far and away the biggest chunk of Congress’ annual budget – spends the public’s money.

The new report focused on the Army’s General Fund, the bigger of its two main accounts, with assets of $282.6 billion in 2015. The Army lost or didn’t keep required data, and much of the data it had was inaccurate, the IG said.

“Where is the money going? Nobody knows,” said Franklin Spinney, a retired military analyst for the Pentagon and critic of Defense Department planning.

The significance of the accounting problem goes beyond mere concern for balancing books, Spinney said. Both presidential candidates have called for increasing defense spending amid current global tension.

An accurate accounting could reveal deeper problems in how the Defense Department spends its money. Its 2016 budget is $573 billion, more than half of the annual budget appropriated by Congress.

The Army account’s errors will likely carry consequences for the entire Defense Department.

Congress set a September 30, 2017 deadline for the department to be prepared to undergo an audit. The Army accounting problems raise doubts about whether it can meet the deadline – a black mark for Defense, as every other federal agency undergoes an audit annually.

For years, the Inspector General – the Defense Department’s official auditor – has inserted a disclaimer on all military annual reports. The accounting is so unreliable that “the basic financial statements may have undetected misstatements that are both material and pervasive.”

In an e-mailed statement, a spokesman said the Army “remains committed to asserting audit readiness” by the deadline and is taking steps to root out the problems.

The spokesman downplayed the significance of the improper changes, which he said net out to $62.4 billion. “Though there is a high number of adjustments, we believe the financial statement information is more accurate than implied in this report,” he said.

“THE GRAND PLUG”

Jack Armstrong, a former Defense Inspector General official in charge of auditing the Army General Fund, said the same type of unjustified changes to Army financial statements already were being made when he retired in 2010.

The Army issues two types of reports – a budget report and a financial one. The budget one was completed first. Armstrong said he believes fudged numbers were inserted into the financial report to make the numbers match.

“They don’t know what the heck the balances should be,” Armstrong said.

Some employees of the Defense Finance and Accounting Services (DFAS), which handles a wide range of Defense Department accounting services, referred sardonically to preparation of the Army’s year-end statements as “the grand plug,” Armstrong said. “Plug” is accounting jargon for inserting made-up numbers.

At first glance adjustments totaling trillions may seem impossible. The amounts dwarf the Defense Department’s entire budget. Making changes to one account also require making changes to multiple levels of sub-accounts, however. That created a domino effect where, essentially, falsifications kept falling down the line. In many instances this daisy-chain was repeated multiple times for the same accounting item.

The IG report also blamed DFAS, saying it too made unjustified changes to numbers. For example, two DFAS computer systems showed different values of supplies for missiles and ammunition, the report noted – but rather than solving the disparity, DFAS personnel inserted a false “correction” to make the numbers match.

DFAS also could not make accurate year-end Army financial statements because more than 16,000 financial data files had vanished from its computer system. Faulty computer programming and employees’ inability to detect the flaw were at fault, the IG said.

DFAS is studying the report “and has no comment at this time,” a spokesman said.

(Edited by Ronnie Greene.)

New York City police upgrade gear after Texas, Louisiana shootings

Crime scene of Dallas shooting

By Gina Cherelus

(Reuters) – The New York City Police Department has acquired $7 million in military-style protective equipment for patrol officers in response to recent shooting attacks on police in Baton Rouge and Dallas earlier this month, officials said on Monday.

“You name it, we’re buying it,” Police Commissioner William Bratton told a news conference. “There’s not a police department in America that is spending as much money, as much thought and interest on this issue of officer safety.”

Bratton said the NYPD has purchased 20,000 military-style helmets, 6,000 heavy duty bullet-proof vests, trauma kits and ballistic doors and windows for patrol cars.

He said the new bullet-proof vests are capable of stopping rounds fired from the type of weapon used in the Baton Rouge shooting that killed three officers and the Dallas shooting that left five officers dead and seven wounded.

“Obviously all over the country people have been deeply trouble by the attack on our officers,” added Mayor Bill de Blasio. “We made this decision quickly in light of the challenges we face.”

Special units are already equipped with protective gear like the upgraded equipment. Because patrol officers are likely to respond to active shooting situations, they will begin carrying the new equipment starting in September, according to police officials.

In recent weeks, major police departments across the country have been implementing new patrol tactics for officers in the wake of racial tension plaguing various cities.

Nearly half of the police departments in the 30 biggest U.S. cities issued directives after the Dallas attack requiring patrol officers to pair up while on duty.

(Reporting by Gina Cherelus; Editing by Dan Grebler)

U.S. posts $53 billion budget deficit in May

WASHINGTON (Reuters) – The U.S. government posted a $53 billion budget deficit in May, a 38 percent drop from the same month last year, the Treasury Department said on Friday.

The government had a deficit of $84 billion in May of 2015, according to the Treasury’s monthly budget statement.

Analysts polled by Reuters had expected a $60 billion deficit for last month.

However, when accounting for calendar adjustments, May would have shown a $102 billion deficit compared with an adjusted $84 billion deficit a year prior.

The current fiscal year-to-date deficit was $407 billion, up 11 percent from a $367 billion deficit at this time last year.

On an adjusted basis, the fiscal year-to-date gap was $413 billion compared with $367 billion at this time last year.

Receipts last month totaled $225 billion, a 6 percent increase from May 2015, while outlays stood at $277 billion, a 7 percent decline from the same month a year ago.

(Reporting by Lindsay Dunsmuir; Editing by Paul Simao)