Michael Herson in the News

By Roxana Tiron | June 15, 2017 3:24PM ET

Congressional Republicans are gearing up for a clash with the Trump administration and among themselves over how much to spend on defense in the fiscal year starting Oct. 1.

While lawmakers will negotiate over specific programs, look for more tension over the overarching question: whether Congress should provide as much as $37 billion more for national security than the administration’s fiscal 2018 request. They also have to contend with spending caps set by Budget Control Act of 2011, Public Law 112-25. The defense spending cap for national security programs in fiscal 2018 is $549 billion.

“I don’t think that the appropriators want to spend less money than the authorizers on defense. It’s just that the appropriators feel that their hands are tied by the budget caps as well as the absence of a budget resolution,” said Michael Herson, president of American Defense International, which represents major defense companies such as Raytheon Co., General Dynamics Corp., and Northrop Grumman Corp.

Democrats likely won’t go along with Republicans’ efforts to boost defense spending if it would mean deeper cuts to domestic spending. President Donald Trump’s budget already proposed $54 billion in cuts across agencies to prop up the larger defense budget and try to stay within overall budget caps. Democrats are insisting there should be parity between domestic and defense spending.

Here are some of the defense decisions ahead:

TOPLINE: Defense authorizers and appropriators in both chambers are divided over the big number. The Pentagon has requested $603 billion for regular defense programs. Leaders of the House and Senate Armed Services Committee want to see that funding at $640 billion. The two committees have jurisdiction over most aspects of national security, including nuclear activities at the Energy Department, but the bulk of the funding would go to the Pentagon.

The top House defense appropriator, Kay Granger, has warned that $603 billion is probably the most the spending panels could do. Both amounts would bust the budget caps, absent another agreement between Congress and White House. Intensifying the debate is about $31 billion in military services’ unfunded priorities.

House Armed Services is going first with its version of the 2018 defense authorization bill. While Chairman Mac Thornberry hasn’t officially decided on the bill’s overall funding, veteran members of the committee, such as Mike Rogers of Alabama, are pressing for the additional $30 billion to $40 billion.

A move to boost defense spending would likely stall the appropriations process with Senate Democrats threatening to block domestic cuts that Republicans may propose to offset Pentagon increases.

LITTORAL COMBAT SHIP: Supporters of the Littoral Combat Ship are pressing for three of the shore-hugging vessels in fiscal 2018. After the Navy requested funding for only one LCS, service officials surprised House lawmakers when they announced during a hearing that the Office of Management and Budget is working on a funding request for a second ship.

The roughly $636 million in additional funding isn’t enough for Alabama and Wisconsin lawmakers who represent the yards building the two versions of the ship. Representative Bradley Byrne, an Alabama Republican, Alabama’s Republican Senator Richard Shelby, as well as Wisconsin’s Democratic Senator Tammy Baldwin and Republican Representative Mike Gallagher have pressed the Navy on the need for a third ship to keep the yards active.

Lockheed Martin Corp. leads a team that builds one version of the LCS at Marinette Marine, Wisconsin, while Austal Ltd. builds the other version in Mobile, Alabama.

“Both LCS shipyards are optimized for three ships per year,” Baldwin, who’s up for reelection next year, said during a Senate Appropriations hearing last month. She also wrote a letter to Trump making the case for three.

WIN-T: The Army’s multi-billion-dollar tactical communications network, the Warfighter Information Network-Tactical (WIN-T) has found itself in the crosshairs of Republican Senators John McCain and Tom Cotton. McCain, the chairman of the Senate Armed Services Committee, concluded last month that the $6 billion program is another Army acquisition “debacle.”
“Some of us feel frustrated,” he said during an Army hearing before his panel. “It’s hard for us to continue to fight for more money in the defense budget when we see $6 billion wasted on one program.”

The Army and congressional critics of the General Dynamics Corp.-led program say it may produce communications networks too fragile for the current combat environments.

“I have seen credible reports that WIN-T has an electromagnetic signature so loud that it practically would call for enemy artillery on the top of its users’ heads,” said Cotton, the Arkansas Republican who leads the Armed Services subcommittee with jurisdiction over the program.

The Army is reviewing its strategic communications networks, and WIN-T is part of that review.

Congressional criticism aside, WIN-T has supporters on Capitol Hill who won’t buckle. More than 170 House members and senators wrote Army officials asking that the service accelerate the deployment of the program’s second increment, or phase. Among the supporters is a new Senate Armed Services member, Elizabeth Warren. General Dynamics’ unit in Taunton, Massachusetts, her home state, has the lead on the program. Look for either policy language seeking to correct the program’s problems, or to restrain it and possibly cut the 2018 request for the program.

HYPOXIA: Oxygen deprivation on some of the nation’s top fighter aircraft is vexing the military services and lawmakers alike. The Navy has been dealing with instances of hypoxia on its Boeing Super Hornets and older versions of the F-18 fighters. However, the Air Force this month announced that it was grounding its new F-35 Joint Strike Fighter jets in Arizona because five pilots had experienced hypoxia-like symptoms. Hypoxia, a deficiency of oxygen reaching the body’s tissues, is a potentially life-threatening problem. Look for potentially more oversight language in an effort to stem the problem, particularly in the House Armed Services Committee where Representatives Nikki Tsongas, a Massachusetts Democrat, and Mike Turner, an Ohio Republican, have are focused on the issue.

RARE EARTH METALS: Representative Duncan Hunter, a California Republican, plans to incorporate provisions from his Metals Act, which seeks to restart the U.S. production of rare earth metals used in U.S. weapons and other technology. The one U.S. mine that could have been a significant U.S. source of rare metals has gone bankrupt. Several foreign entities, including a Chinese rare earths company, were vying for control of the Molycorp.-owned mine. A group of investment firms that have the backing of a Chinese company, won the bankruptcy auction late on June 14, the Wall Street Journal reported.

The mine contains rare earths metals such as neodymium, praseodymium and dysprosium that go into magnets. Other rare earth metals are cerium, scandium, yttrium. China dominates the rare earths market, and the U.S. has relied heavily on the Chinese-mined metals.

Hunter’s legislation would allow domestic companies access to five-year, interest-free loans to develop advanced and environmentally friendly technology for the production of rare earth metals.

The Trump administration is likely to back the measure, as officials have been working to address the issue as well, the California Republican said in a telephone interview.
“This is simply to secure rare earth metals for the next 50 years,” Hunter said. “It creates a marketplace.”

SOLID ROCKET PROPELLANT: Hunter’s Metals legislation includes a provision relating to the domestic sourcing of ammonium perchlorate that powers missile defense systems. That part of the bill may prove so controversial that it could endanger the rare metals part, Hunter said. So, he’s weighing whether to fight for it during the national defense authorization debate. American Pacific (AMPAC), headquartered in Cedar City, Utah, is its only U.S. producer. Huntsman Family Investments has ownership in the private company. The president and chief executive officer of Huntsman Family Investments is Paul Huntsman, the brother of Jon Huntsman, Jr. whom Trump named ambassador to Russia.

The issue here is whether AMPAC will be shut out of providing the government and missile defense companies with the product in the face of foreign competition.

The company risks financial stress as U.S. demand for ammonium perchlorate has dwindled to 2.7 million pounds in 2017 from 23 million in 1997, according to documents presented to lawmakers and obtained by Bloomberg News. The company anticipates higher future demand, but faces the risk of not being able to produce in the short run. Without a domestic source restriction, AMPAC has faced competition from French government-subsidized producer Herakles, owned by Airbus Safran Launchers, according to the documents. Herakles also dominated the European market and making AMPAC’s entry unlikely, the documents said. The sole U.S. producer of the oxidizer is making the case for companies such as Orbital ATK and Aerojet — its main buyers — to enter long-term cost agreements for price stability, or have a government supply contract if the companies can’t find an agreement. So far, the Pentagon and some of the companies oppose the changes, Hunter said in the interview.

FIGHTER AIRCRAFT: As in the past, Boeing Co.’s Super Hornets and Lockheed’s F-35 Joint Strike Fighters are likely to get extra congressional attention, and possibly funding. The military services have offered lawmakers cover for these congressional darlings and have included additional aircraft in their so-called unfunded priorities list they submitted to the congressional defense committees.The Navy has listed 10 more Super Hornets as necessary on top of the 14 requested by the Trump administration, while the Air Force, Navy and Marine Corps together would need about 24 F-35s more than the total of 70 requested by the Pentagon.