Quick Hit – December 5, 2018

by Gene Moran in Quick Hits

Some Reports of Interest

International Workboat Show

Capitol Integration attended the International Workboat Show last week. Having attended for the last four years, one trend was obvious – the commercial maritime and service industry is feeling the lift of an improving economy.

 

Secretary of Defense Mattis at the 2018 Reagan National Defense Forum (Defense News).

2018 Reagan National Defense Forum

Capitol Integration attended the sixth Reagan National Defense Forum at the Reagan Library this weekend, in the company of civilian and uniformed leaders of the Department of Defense, leaders of Congressional defense authorization and appropriations panels, and leaders of defense Primes and thought leaders from a variety of DC-based think tanks. In the main, it offered attendees a collective sense of where the industry will move in the coming months. Below are a few sobering observations at the macro level:

  • The general public is more disassociated than ever from a direct connection to the military, and therefore, an inherent understanding of the present strains on readiness
  • Agreement on a “topline” funding figure for defense in FY20 and beyond is far from certain
    • President Trump has stated he believes the FY20 number will be $700B
    • SASC Chairman Inhofe believes the FY20 number must be $733B
    • Incoming HASC Chairman Adam Smith believes the FY20 number must be weighed against relative interests, such as Health Care and Infrastructure
    • If the topline were to grow with inflation, that would translate to a relative cut as personnel and operations/maintenance costs outpace inflation
  • The military’s ability to win two major conflicts simultaneously is zero
  • The outcome of conflicts with China or Russia would include losses of capital assets our country has not seen since World War II
  • The tech industry generally views China as the biggest world threat
  • US payments on US debt interest to China is effectively funding the ongoing Chinese military buildup

Appropriations Update

While the defense bill and veterans and military construction appropriations bill for FY19 were dispatched with record speed, seven appropriations bills remain unfinished. Chief among them is the Homeland Security appropriations bill, which funds 18 agencies and would potentially fund a border wall.

The passing of President George H.W. Bush gave Congress convenient top cover to extend the current Continuing Resolution (CR) for two more weeks until December 21st.  Funding would otherwise have expired December 7th.  President Trump is demanding $5B for the border wall, so look for a compromise to be worked out. While this is a lot of money being debated, compared to both past and previous funding debates this one is likely to be resolved before Congress breaks for the Holidays.

Retired General Jack Keane, recognized with the “Peace Through Strength” Award at the 2018 Reagan National Defense Forum (Twitter).


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