BUDGET BRINKMANSHIP: Congressional leaders from both parties and both chambers head to the White House today for more talks aimed at breaking the impasse over this year’s federal budget. And once again the specter of a government shutdown or another continuing resolution hangs over the negotiations. Every day without a real budget is a day the Pentagon can make no progress in rebuilding declining readiness, much less begin to fulfill the president's promise to massively rebuild the military that a bipartisan consensus in Congress agrees is overcommitted and underresourced. If no deal is reached by the Jan. 19 deadline, the result could be a partial government shutdown, the most unwanted outcome on the Hill.

O BUDGET, WHERE ART THOU?: Congress has just 11 days, including the weekend, until the current stopgap measure keeping the military and rest of the federal government funded expires. After being put on ice over the holidays, the talks over a 2018 spending bill have now become entangled in the immigration debate. Democrats want guarantees that an estimated 700,000 young people who arrived illegally as children will be able to stay in the United States.

President Trump is demanding Congress pony up $18 billion over 10 years for a Mexico border wall, throwing new uncertainty into the talks. “We want the wall. The wall is going to happen or we're not going to have [Deferred Action for Childhood Arrivals],” Trump said at Camp David Saturday. “We all want DACA to happen. But we also want great security for our country. So important. We want to stop the drugs from flowing in. Very important.”

Sen. Lindsey Graham framed the standoff in a hallway interview on Capitol Hill. “So the wall is a necessary part of this deal because President Trump campaigned on it,” Graham said. “A pathway to citizenship [for the Dreamers] is the wall for the Democrats. There is not going to be a big deal that does not have a pathway to citizenship for the DACA population. There is not going to be a deal that does not have strong border security.”

DEMS DIG IN: “Right now the Democrats are holding the whole spending bill hostage for a DACA solution,” Majority Whip John Cornyn said yesterday. The two measures are on separate negotiation tracks, in part because the DACA program doesn’t expire until March 5. But Democrats are threatening to vote against a must-pass government funding bill unless the Senate agrees to an immigration bill that meets their terms.

“The White House issued a series of unreasonable demands, entirely outside the scope of our ongoing negotiations about DACA and border security,” Senate Minority Leader Chuck Schumer complained yesterday. “It is part of a pattern of behavior on the part of this White House during sensitive bipartisan negotiations. Over the past year, the Trump White House has much more frequently been a disruptive force rather than a unifying force.”

Cornyn said passing another continuing resolution may be all the two parties can agree on by the end of next week because of the significant and numerous disagreements. “That’s kind of where we are,” Cornyn said. “We may not be able to meet that deadline. We may be looking at another CR.”

DITCH THE CAPS: Many lawmakers are hoping for an overarching two-year deal that would raise Budget Control Act caps for defense and nondefense spending to allow full funding of the National Defense Authorization Act and its hike in military aircraft, ships and troops. “The first step in ensuring national security is funding our armed forces at the full $700 billion FY18 NDAA requirement,” Rep. Mike Turner, the chair of the House Armed Services’ tactical air and land forces subcommittee, wrote in a Fox News op-ed.

Turner laid the blame for years of constrained defense funding at the feet of the Obama administration, though Congress created and passed the BCA caps. “During the last administration, our Army let nearly 90,000 soldiers go and fewer than 10 percent of our brigade combat teams are now ready to deploy,” Turner wrote. “We have 41 fewer ships than in 2001, over half of the Navy’s aircraft are grounded, and the tragedies of the USS Fitzgerald and USS McCain show our sailors are pushed to the breaking point.” Congress needs a budget deal to reverse those effects, but some lawmakers are still “struggling to recognize the risk,” he wrote.

OLYMPIC THAW: North Korea has agreed to send a delegation to the Winter Olympics next month in Pyeongchang, South Korea, next month, a breakthrough that came after the representatives of the two Koreas met for the first time in two years at the Panmunjom “truce village” in the Demilitarized Zone. South Korea agreed to temporarily lift sanctions against the North to facilitate the travel of athletes, officials, journalists and visitors to the 2018 games. The talks were billed as being limited to issues surrounding North Korea participation in the games, but the South also raised the issue of allowing the reunions of families who have been separated for 64 years since the end of the Korean War in 1953. South Korea also proposed further talks to lower military tensions, and perhaps begin the discussion of denuclearization of the Korean Peninsula.

PENCE CREDITS TRUMP: In an interview with talk show host Dana Loesch, Vice President Mike Pence said the progress in the talks was “a direct result of the clear and strong and unambiguous leadership that President Trump has been providing.” Pence, who noted his father fought in Korea, said “we're not going to relent until North Korea abandons its nuclear and ballistic missile programs.”

BUILDING ON THE BREAKTHROUGH: Yonsei University Associate Professor John Delury says much of the credit should go to South Korean President Moon Jae-in. Writing in Foreign Affairs, Delury argues “To faraway observers, the Olympics gambit may have seemed like a ploy invented by Kim. In fact, Kim’s overture was a response to Moon’s efforts. ... The sooner the Trump administration follows Moon’s lead in opening a direct channel to Pyongyang, the better.

“Although Trump himself has sent positive messages on opening up talks, the prospect of a resumed inter-Korean dialogue has sparked wider fears that Kim is merely seeking an opening whereby he could split the U.S.-South Korean alliance,” wrote Delury, who added that the fear “is exaggerated, as it underestimates the strength of Washington and Seoul’s relationship, which has proven its resilience over a long history of stress tests.”

OR THERE’S THE WAR OPTION: On the hand, argues Edward Luttwak, a senior associate at the Center for Strategic and International Studies, it may be well past time to “use well-aimed conventional weapons to deny nuclear weapons to regimes that shouldn’t have firearms, let alone weapons of mass destruction.” Writing in Foreign Policy, Luttwak argues “there is still time for Washington to launch such an attack to destroy North Korea’s nuclear arsenal. It should be earnestly considered rather than rejected out of hand.

“Of course, there are reasons not to act against North Korea. But the most commonly cited ones are far weaker than generally acknowledged,” Luttwak writes as he runs down some of the obvious drawbacks of military action.

Good Tuesday morning and welcome to Jamie McIntyre’s Daily on Defense, compiled by Washington Examiner National Security Senior Writer Jamie McIntyre (@jamiejmcintyre), National Security Writer Travis J. Tritten (@travis_tritten) and Senior Editor David Brown (@dave_brown24). 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.



HAPPENING TODAY — CHINA’S HIGH-TECH THREATS: This afternoon at 2, a group of think tank experts will testify before a House Armed Services panel about China’s pursuit of emerging and exponential technologies. That means cutting-edge technologies that are rapidly advancing while dropping in cost, and that are ripe to be deployed for defense purposes by one of the U.S.’s top global competitors. Robotics, artificial intelligence, synthetic biology, nanotechnology and 3-D printing are all considered exponential technologies poised to disrupt everything from factory floors to weapons systems. In November, War on the Rocks wrote about China’s embrace of quantum technology.

ALSO TODAY: In the afternoon, Trump is scheduled to sign an executive order titled “Supporting our Veterans during their Transition from Uniformed Service to Civilian Life.” He then meets with his defense secretary, Jim Mattis.

THE INVISIBLE HAND: Among Mattis’ first-year accomplishments is avoiding getting on the wrong side of his boss, even when he’s on the opposite side of a policy decision. He does this by keeping his advice to the president private, and staying in his lane, leading the military, and fighting the nation’s wars. In this week’s Washington Examiner magazine, we take a look at how Mattis has used his invisible hand to deftly steer foreign policy without drawing the ire of Trump.

SQUEEZING IRAN: In the wake of recent popular protests in Iraq, Trump should impose sanctions against any entity that received a waiver under the Iran nuclear deal, Rep. Peter Roskam tells the Washington Examiner, Joel Gehrke writes. “It’s time to deprive the regime of further resources to repress their own people and terrorize its neighbors, and target all regime-owned entities with robust economic sanctions — no person, bank, or commodity should be off-limits,” said the House Republican.

An expanded sanctions package would target the Central Bank of Iran, the locus of some of the most significant economic relief that former President Barack Obama provided in exchange for Iranian nuclear concessions. Roskam, a prominent Iran hawk who worked closely with the White House on tax reform, argued that the recent protests within Iran justify the move.

SQUEEZING PAKISTAN: In an attempt to clarify the status of some $900 million in military assistance to Pakistan, the Pentagon insisted yesterday the money has not gone away, it’s just not going anywhere until Pakistan shows it’s not aiding the enemies of the United States. “Our expectations are straightforward: Taliban and Haqqani leadership and attack planners should no longer be able to find safe haven or conduct operations from Pakistani soil,” said Col. Rob Manning, a spokesman at the Pentagon.

In a follow-up to questions at yesterday’s off-camera briefing, Manning issued a statement saying the $900 million “has been suspended, not canceled or reprogrammed, as we continue to hope that Pakistan will take decisive action against the terrorist and militant groups that we seek.”

Of the $900 million of Coalition Support Funds, $400 million can only be released if the DoD certifies the Pakistan government has made significant progress against the Haqqani network. “The Secretary has not yet made a decision on the certification required by the FY17 NDAA,” Manning said. “To date, no FY17 CSF have been disbursed to Pakistan. We last disbursed $550 million of FY16 CSF to Pakistan in late February-early March 2017.”

THE SPACEX SATELLITE MYSTERY: Nobody is admitting it, but Bloomberg is reporting that a highly-classified military satellite may have crashed into the sea after a malfunction of a SpaceX Falcon 9 rocket. “The mission — referred to by the code name Zuma — took off from Cape Canaveral Air Force Station in Florida Sunday,” Bloomberg reports. “But the U.S. Strategic Command, which monitors more than 23,000 man-made objects in space, said it is not tracking any new satellites following the launch.”

“We have nothing to add to the satellite catalog at this time,” the account quotes a STRATCOM spokesman as saying. A spokesman for Elon Musk’s Space Exploration Technologies Corp said, “We do not comment on missions of this nature; but as of right now reviews of the data indicate Falcon 9 performed nominally,” according to Bloomberg.

ROYCE ROLLS: House Foreign Affairs Chairman Rep. Ed Royce announced yesterday he’ll be retiring at the end of his current term. “I have decided not to seek re-election in November,” the California Republican said in a statement.

Royce’s announcement comes days after Trump chose his wife for a senior position at the State Department, which the Foreign Affairs Committee oversees. Royce was first elected in 1992, representing one of the GOP outposts in the Democratic stronghold of California. But Democrats plan to make an aggressive push to win the seat, after Hillary Clinton carried the district in 2016 by nine points.

“I want to focus fully on the urgent threats facing our nation, including: the brutal, corrupt and dangerous regimes in Pyongyang and Tehran, Vladimir Putin’s continued efforts to weaponize information to fracture western democracies, and growing terrorist threats in Africa and Central Asia,” Royce, who is term-limited from his Foreign Affairs chairmanship by House rules, said in a statement last night.

PENCE’S MIDEAST TRIP: The vice president will travel to three countries in the Middle East in late January, including Israel, where the Trump administration recently ordered the relocation of the U.S. embassy from Tel Aviv to Jerusalem.

The trip will occur weeks after its initial scheduling, which was postponed in mid-December so Pence could remain in Washington for a key vote on the GOP tax bill. Pence will now head overseas on Jan. 19, and return to Washington a week before Trump delivers his first State of the Union address to Congress on Jan. 30.

A White House official confirmed that Pence will hold bilateral meetings with leaders from Egypt and Jordan during his trip and deliver remarks to Israeli government officials — something Trump had planned to do during his visit last May but ultimately canceled due to concerns about hecklers.

McFARLAND RENOMINATED: The White House has renominated K.T. McFarland, who previously served as former national security adviser Michael Flynn’s deputy, to be the ambassador to Singapore. McFarland was previously nominated for the position in May, but her nomination was delayed after she came under scrutiny for her knowledge concerning communications between Trump campaign officials and Russians.

Sens. Ben Cardin and Cory Booker said her nomination should be put off until Congress investigates more of her “knowledge and involvement” with Flynn’s actions.

McFarland testified before Congress in July she was “not aware of any of the issues or events” concerning Flynn’s contact with then-Russian Ambassador Sergey Kislyak. However, a report from the New York Times emerged in December saying McFarland was aware of emails between Flynn and Kislyak, and Flynn’s plea deal with federal prosecutors also raised questions about her previous denials.

The White House also sent four Pentagon nominations to the Senate: Kevin Fahey, to be assistant secretary of defense, William Roper, to be assistant Air Force secretary, Phyllis Bayer to be assistant secretary of the Navy and Alex Beehler for assistant secretary of the Army.

THE RUNDOWN

Reuters: Trump to call on Pentagon, diplomats to play bigger arms sales role - sources

Washington Post: The military can’t stop accidentally undermining Trump on Twitter

New York Times: Iran Hints at Rift With Atomic Agency if U.S. Quits Nuclear Deal

War on the Rocks: America in Search of an Un-Geneva for Syria

Honolulu Star-Advertiser: Navy Likely To Keep Long-Standing Grip On Pacific Command

Navy Times: Set up to fail?: Marines don’t have enough ships to train for a real amphibious assault

Foreign Policy: It’s Time to Bomb North Korea

Defense One: What to Expect from the Pentagon’s First-Ever Audit

Task and Purpose: This Is One Of US Military Planners’ Greatest Fears In A War With North Korea

Wall Street Journal: In North Korea, Hackers Mine Cryptocurrency Abroad

Military.com: Mattis on War, Tyranny, Revolution and Body Counts

Washington Post: Anna Mae Hays, nurse who became U.S. military’s first female general, dies at 97

Calendar

TUESDAY | JAN. 9

7 a.m. 2799 Jefferson Davis Hwy. 30th Annual National Symposium of the Surface Navy Association with an evening keynote address by Adm. John Richardson, chief of naval operations. navysna.org

8 a.m. 1919 North Lynn St. Procurement Division Meeting. ndia.org

10 a.m. Dirksen 419. Attacks on U.S. Diplomats in Cuba: Response and Oversight. foreign.senate.gov

12:30 p.m. 1777 F St. NW. What to Worry About in 2018 with former Deputy Secretary of State Antony Blinken. cfr.org

2:00 p.m. Rayburn 2118. Subcommittee hearing on China’s pursuit of emerging and exponential technologies. armedservices.house.gov

2 p.m. 1300 Pennsylvania Ave. NW. Security Challenges in East Asia. wilsoncenter.org

WEDNESDAY | JAN. 10

7 a.m. 2799 Jefferson Davis Hwy. 30th Annual National Symposium of the Surface Navy Association with Rep. Rob Wittman and Adm. Paul Zukunft, commandant of the Coast Guard. navysna.org

10 a.m. Rayburn 2118. Full committee hearing and Department of Defense update on the Financial Improvement and Audit Remediation (FIAR) Plan. armedservices.house.gov

10 a.m. 1775 Massachusetts Ave. NW. Sustainable security: The transatlantic community and global challenges with H.E. Erna Solberg, the prime minister of Norway. brookings.edu

10 a.m. Rayburn 2172. Sanctions and Financial Pressure: Major National Security Tools. foreignaffairs.house.gov

12 p.m. 1201 Pennsylvania Ave. NW. Realizing A Free and Peaceful Indo-Pacific. hudson.org

1 p.m. 1211 Connecticut Ave. NW. With Great Power: Modifying U.S. Arms Sales to Reduce Civilian Harm. stimson.org

THURSDAY | JAN. 11

7:30 a.m. 2799 Jefferson Davis Hwy. 30th Annual National Symposium of the Surface Navy Association with Navy Secretary Richard Spencer and James Geurts, assistant secretary of the Navy for research, development and acquisition. navysna.org

9 a.m. 1211 Connecticut Ave. NW. The Past and Future of South Asian Crises with Rep. Ami Bera, vice ranking member of the House Foreign Affairs Committee. stimson.org

9:15 a.m. 529 14th St. NW. Iran's Protests and Their Impact on the Arab Region. press.org

9:30 a.m. 529 14th St. NW. Challenging Guantanamo. press.org

10 a.m. Dirksen 419. U.S. Policy in Syria Post-ISIS with Ambassador David Satterfield. foreign.senate.gov

12 p.m. 214 Massachusetts Ave. NE. Rep. Ron DeSantis discusses President Trump’s “Ultimate Deal”: Is Israeli-Palestinian Peace Possible? heritage.org

12 p.m. 1700 Army Navy Dr. AFCEA Washington, D.C. luncheon with Lt. Gen. Alan Lynn , director of the Defense Information Systems Agency. dc.afceachapters.org

12 p.m. 1800 M St. NW. Countering Hezbollah’s Transnational Criminal Enterprise. defenddemocracy.org

2:30 p.m. 740 15th St. NW. Guantanamo Under Trump. newamerica.org

FRIDAY | JAN. 12

11 a.m. 214 Massachusetts Ave. NE. Assessing the Trump administration’s National Security Strategy. heritage.org

11 a.m. 1300 Pennsylvania Ave. NW. All You Need to Know about Russian Hackers. wilsoncenter.org

1 p.m. 1616 Rhode Island Ave. NW. Book discussion of “Safe Passage: The Transition from British to American Hegemony” with author Kori Schake. csis.org

TUESDAY | JAN. 16

10 a.m. 1775 Massachusetts Ave. NW. Pakistan, America, and extremism: The path ahead

12:15 p.m. 740 15th St. NW. The Future of Euro-Atlantic Conditionality. newamerica.org

3 p.m. 1211 Connecticut Ave. Emergency Management in Japan: Prospects for US-Japan Cooperation. stimson.org