About this time every year, budget offices in federal departments and agencies put the last decimal points in their annual spending proposals before they begin a line-by-line, three-month-long battle with the Office of Management and Budget.
All the departments and agencies, that is, except the Department of Defense. When it comes to the nuts and bolts of budget-building--as opposed to Cabinet-level battles--there is substantial difference in the way OMB reviews the Pentagon's proposed budget and the proposals of other departments.
Defense is spared much of the adversary review process that all other departments must endure, because OMB's budget examiners are involved almost from the beginning in developing the defense budget. They know what's there and how it got there. At budget review time, OMB's 35 defense budget examiners travel to the Pentagon to question a budget they helped develop.
Meanwhile, the Commerce, Labor and Transportation departments (to pick three) send their budget proposals over to OMB without having had any prior formal contact with the budget examiners (although there are usually many unofficial contacts). When it comes time to defend the departmental proposals, department budget chiefs explain them officially to the OMB examiners for the first time during formal hearings on OMB's turf in the New Executive Office Building.
The Pentagon budget, it is argued, is so complex, so fraught with long-range difficulties and potential pitfalls, that the beleaguered examiner would have no chance of understanding what was going on if his first full-fledged encounter with it came in the annual fall hearings. After all, the Defense Department spends $1 of every $4 spent by the federal government.
Critics charge that this inevitably means that the Pentagon has co-opted OMB. How can somebody who helped develop a proposal fairly sit in judgment of it?
A top former political official in OMB who witnessed the process first-hand for several years said, "I feel that OMB becomes captured, because they've played a role in shaping issues and have a very difficult time in coming back and raising fundamental questions. I feel there should be a more adversarial arrangement . . . . Healthy tension is good.
"The remedy I would come up with is that OMB should pick out specific issues that are important and challenge those issues where they need to be challenged. As in every budget process there are always legitimate questions that can be raised about the budget proposals."
But senior career types in both the Pentagon and OMB jumped immediately to the defense of the process.
"The appearance of co-option is just that," said an OMB official. "The counter is that you get to know more about the program . . . . This way all of the OMB staff ideas are considered somewhere and frequently they emerge not as our ideas, but as the ideas of the secretary of defense. In that way, you avoid the necessity for confrontation."
In fact, participation in budget planning may be the only way OMB would have impact on the defense budget, this official argues, because "historically there is a public perception that OMB is not competent to challenge the secretary of defense. After all, national defense is at stake. Do you want a green bureaucrat to decide how we are going to defend ourselves?"
In the Pentagon, a senior official said that OMB "gets far more information this way; we are far more open with them" than would be the case if OMB were not a player.
"It's not that we've captured them," he said. " . . . The tendency to ignore facts in the budget process is quite easy. This way, OMB can't do that. On the other hand, they have so much information that they can sometimes argue against us. It certainly isn't a sweetheart operation and it never has been."
The arrangement started, according to officials, when the Defense Department was organized in 1947 and the secretary's office found itself short on the expertise needed to question the calculations from the military departments. The Bureau of the Budget, OMB's predecessor, was asked to help.
Over the years, the defense budgeting process has gotten more and more complicated. It now includes five-year plans and an 18-month cycle for each fiscal year. Descriptions of that process are accompanied by servings of alphabet soup, with an extra helping of Ps: PPBS for Planning Program Budgeting System; POMs for Program Objective Memoranda and PDMs for Program Decision Memoranda. All of these are studied by the DRB (Defense Resources Board), which includes the heaviest hitters from OMB and OSD (Office of Secretary of Defense).
Ultimately, big-picture decisions are reached at the presidential level, as they were this past week, when President Reagan ordered $13 billion worth of cuts over three years--much less than Budget Director David A. Stockman wanted. Congress, of course, always has the chance to influence that total after the executive branch finishes its work.
James T. McIntyre Jr., budget director for President Carter, was asked if he had ever considered changing the way OMB looks at the defense budget.
"I did consider changing it," he said. "I talked with my staff several times about my concerns. But for various reasons I decided not to change. The Secretary of Defense and I were communicating quite well. I would sit down with him before final decisions . . . ." McIntyre also said his relationship with Carter was such that he felt OMB's positions would be heard at the highest level when necessary.