THE LOOMING BUDGET DISASTER: At the beginning of the fiscal year, Pentagon officials were breathing easy. A bipartisan two-year agreement meant the defense budget was passed on time and programs were fully funded, with the promise that the stranglehold of sequestration was a thing of the past.

But now the storm clouds are gathering again, with a divided Congress further polarized by President Trump’s proposed budget, which ditches any effort to reach another agreement on lifting the mandatory spending caps imposed by the Budget Control Act of 2011, which doesn’t expire for two more years. If there’s no agreement to raise the budget caps over the summer, the result will be another stop-gap continuing resolution, or CR.

“I think we're staring down the barrel of a CR September 30. We have 39 working days left between now and 31 July,” said David Perdue, R-Ga. at yesterday’s Senate Armed Services Committee hearing on Air Force programs. “If we don't move this up as a priority, there is no way we're going to get defense authorization done.”

‘ABSOLUTELY DEVASTATING’: In normal times a CR would simply freeze spending at current levels until the real budget is passed. But because the Budget Control Act would kick in, spending would actually be cut, dramatically, until a deal is reached.

It would be on an “absolutely devastating scope and scale,” outgoing Air Force Secretary Heather Wilson told senators. “Sequester at this point would be four times as bad as it was in the previous time that the Air Force went through it,” she said, estimating the Air Force budget taking a $29 billion hit.

That would trigger a horror show of consequences, Wilson said. “So let me give you what that would look like. … No F-35s, cut all of the KC-46s, stop the B-21 program, no ground-based strategic deterrent, no research development tests and evaluation for any space system, most of the fourth- and fifth-generation modifications, and all the science and technology … 16 new military construction projects that wouldn't start.”

THE BLAME GAME: Democrats are already trying to paint Republicans as the bad guys in the scenario. “Let's be clear who's talking about CR, who's expressing worry about CR, who's saying we might run into a CR. It's not Democrats. We don't want a CR; we want a budget,” said Tim Kaine, D-Va. “We got a great appropriations bill at the end of 2018 with two Republican Houses that Republican colleagues here voted for, but then after the president said he didn't like it, folks switched their votes.”

STILL TIME: Senate Armed Services Committee chairman James Inhofe, R-Okla., said he is “fully aware of the time remaining” to pass a budget, adding that it remains the committee's “intent and that's our commitment.” And Tom Cotton, R-Ark., said that “it's hard to imagine we would go back to the actual sequester levels,” but a proposal “being batted around” to have a four-year continuing resolution would be even worse. “Let's hope that doesn't happen, it usually hasn't happened since 2013,” Cotton said, noting that in years past, the committee finds a workaround to blunt the effect of the budget caps.

NELLER DENIES LEAK STRATEGY: In budget hearings in both the House and Senate this week and last, Democrats used a leaked internal memo from Marine Corps commandant Gen. Robert Neller to his boss, Navy Secretary Richard Spencer, to hammer the point that President Trump’s use of troops along the border is negatively affecting Marine Corps readiness. The March 18 memo, which was first reported by the Los Angeles Times, lists nine categories of unexpected expenses that have the Corps in a budget bind, of which one was “Unplanned/unbudgeted Southwest Border Deployments.”

Newsweek reported yesterday that the leak of the memo was intentional, an effort by Neller to highlight how his service was being hurt “as the Trump administration tries to bankroll the southwest border with defense funds at the expense of combat readiness.”

In a statement to Newsweek, Spencer said Neller denied leaking the memo, which he said was a private working document. “I have personal assurances from the Commandant that he did not leak the memo himself, or direct or otherwise encourage any member of the Marine Corps or his staff to do so.”

And in congressional testimony last week, Joint Chiefs chairman Gen. Joseph Dunford said he discussed the memo with Neller.

“He listed a number of unanticipated bills that the Marine Corps was confronted with in this fiscal year, one of which was the southwest border. Those bills in aggregate created difficulties for him in funding priorities,” Dunford said. “It wasn't a letter about the southwest border and didn't single out the southwest border deployment as being the issue. It identified the southwest border as one of the unfunded, one of the unanticipated bills.”

Good Friday morning and welcome to Jamie McIntyre’s Daily on Defense, written and compiled by Washington Examiner National Security Senior Writer Jamie McIntyre (@jamiejmcintyre) and edited by Kelly Jane Torrance (@kjtorrance). Email us here for tips, suggestions, calendar items, and anything else. If a friend sent this to you and you’d like to sign up, click here. If signing up doesn’t work, shoot us an email and we’ll add you to our list. And be sure to follow us on Twitter: @dailyondefense.

YEMEN REBUKE HEADED FOR VETO: On a vote of 247 to 175, with 1 member voting “Present,” the House passed legislation yesterday to end U.S. support of Saudi-led airstrikes in Yemen, sending the measure to President Trump, who is expected to issue the second veto of his presidency.

The House vote came after Democrats defeated a last-minute attempt by the Republicans to amend the bill with a pro-Israel provision, which would have blocked it from clearing Congress. The Senate passed the measure last month with bipartisan support. It would end U.S. military involvement in the Yemen civil war that began in 2015.

A two-thirds majority is needed in both chambers to override a presidential veto, and there are not enough Republicans who support the Yemen resolution to block the president.

MAYBE NEXT YEAR: In the face of widespread confusion about how a complete or partial shutdown of the U.S.-Mexico border would work and fears about what it would do to the U.S. economy, President Trump yesterday backed off his threat.

At the beginning of the week, Trump was complaining that Mexico was responsible for the wave of Central American immigrants flooding the border, because it wasn’t enforcing its own tough immigration laws. Now he says Mexico is doing “a great job,” so he’s letting it off with a “one-year warning.”

“Mexico, the last four days, has really done a great job on their southern border with Honduras, with Guatemala, with El Salvador, of grabbing and taking and bringing people back to their countries,” Trump said yesterday. “Before we close the border, we'll put the tariffs on the cars. I don't think we'll ever have to close the border, because the penalty of tariffs on cars coming into the United States from Mexico, at 25 percent, will be massive.”

When a reporter asked if that meant the southern border stays open for at least a year, Trump hedged. “I didn't say that. We would start with the tariffs and we'll see what happens.”

NO F-35 WORKING GROUP: In an unceremonious rebuff of Turkish foreign minister Mevlut Cavusoglu, Secretary of State Mike Pompeo said “No, thank you” to Turkey’s proposal to form a “technical working group” to discuss whether the country’s purchase of Russian S-400 air defenses compromises the security of NATO systems, including the Ameruican F-35 Joint Strike Fighter.

Cavusoglu dismissed U.S. assessments that the deal would help Russia learn how to target the American-made F-35 and called for a working group to discuss the issue, but the United States flaty rejected the idea.

"The U.S. and Turkey have already held a defense and security working group on Feb. 5 to discuss the S-400 issue set,” a State Department official told the Washington Examiner. "Our position on this issue is very clear, that the F-35 and S-400 are incompatible, and we raise it at every opportunity, including in conversations at the highest levels.”

Pompeo privately with Cavusoglu on Wednesday expressed optimism that the dispute would be resolved. “Our position hasn't changed. There's great opportunities for the United States and Turkey to work closely together,” he said yesterday. “I had a good, long conversation with the Turkish foreign minister yesterday, and I am very confident we'll find a path forward.” That, despite the fact the two countries can’t agree on what was said in the private meeting.

A LOSE/LOSE SITUATION: Turkey being kicked out of the F-35 program would hurt Turkey’s defense industrial base and could cause delays in the U.S. program as well.

In testimony on Capitol Hill, F-35 program manager Vice Adm. Mathias Winter said the result “would be between 50- and 75-airplane impact over a two-year period,” according to Breaking Defense.

Winter said between 6 and 7 percent of F-35 parts are made in Turkey. “We would see within 45 to 90 days an impact of the slowing down or stopping of those parts to the three production lines.”

MEANWHILE TRAINING AND F-35 DELIVERIES CONTINUE: The Pentagon yesterday confirmed that Turkish pilots are still training on two F-35s delivered to Turkey last year at Luke Air Force Base in Arizona. And Bloomberg reports that just this week the Pentagon and Lockheed Martin delivered another F-35 jet bought by Turkey to the Arizona base despite the continuing dispute.

Another F-35 ordered by Turkey could be delivered to the Arizona base on Friday, Winter told Bloomberg in an interview yesterday, which would bring to four the number of F-35s destined for Turkey.

ASSANGE NON GRATA: WikiLeaks says its founder Julian Assange will be expelled within “hours to days” from the Ecuadorian embassy in London, where he has lived in asylum for nearly seven years. Earlier this week Ecuadorian president Lenin Moreno said Assange had repeatedly violated the terms of his asylum at the embassy.

Under the agreement, Assange “cannot lie or, much less, hack into private accounts or private phones,” and he cannot “intervene in the politics of countries or, worse, friendly countries,” Moreno said.

The Rundown

Washington Examiner: The ISIS ‘caliphate’ has been smashed. Now what?

Bloomberg: Shanahan Likely Will Be Trump's Defense Nominee, Inhofe Says

AP: Taliban siege in remote Afghan province kills 12 more troops

Washington Post: Current, former Pentagon leaders sound alarm on Chinese technology in 5G networks

Wall Street Journal: China’s Fishing Militia Swarms Philippine Island, Seeking Edge in Sea Dispute

AP: Pentagon appoints four-star for new review of Niger attack that killed four US soldiers

New York Times: Militia Advances on Libyan Capital, Raising Prospect of Renewed Civil War

Navy Times: SEALs lawyered up during war crimes case, then prosecutors went after their lawyer

Stars and Stripes: With Lithuania pact, U.S. signals increased military role near Russia

AP: Russia revamps Arctic military base to stake claim on region

CNN: An Exclusive Look Inside Russia's Arctic Military Base

New London Day: Courtney Drumming Up Support For Three-Sub Proposal

Breaking Defense: Russia Builds New Co-Orbital Satellite: SWF, CSIS Say

The Hill: Opinion: Protecting the borders is now a military mission

Washington Post: Opinion: I am a survivor of Islamic State violence. Don’t forget us.

Calendar

TUESDAY | APRIL 9

9 a.m. 1152 15th Street N.W. Center for a New American Security briefing on “NATO Foreign Ministers Meeting and 70th Anniversary of the Alliance.” www.cnas.org/events

11:45 a.m. 1201 Pennsylvania Ave. Hudson Institute event: “Risks and Opportunities of Emerging Technologies: A Conversation with Congressman Mike McCaul,” ranking Republican, House Foreign Affairs Committee. www.hudson.org.

TBA: President Trump welcomes Egyptian President Abdel Fattah Al Sissi to the White House.

THURSDAY | APRIL 11

9:00 a.m. 1667 K Street N.W. The Center for Strategic and Budgetary Assessments releases a report, “An Air Force for an Era of Great Power Competition,” which recommends creating a future aircraft inventory that would be more lethal and better able to operate in future contested and highly contested environments compared with today's force. Experts include: Mark Gunzinger, Carl Rehberg, Jacob Cohn, Timothy Walton, Lukas Autenried. Register at www.csbaonline.org.

10:30 a.m. United States Naval Academy. Sen. Martha McSally, R-Ariz., delivers keynote address at a “National Discussion on Sexual Assault and Sexual Harassment at America's Colleges, Universities, and Service Academies.” Hosted by the secretaries of the Navy, Army, and Air Force. www.usna.edu