Key policy moves put spotlight on Shanahan as potential SECDEF

By Tony Bertuca  / March 12, 2019

Acting Defense Secretary Pat Shanahan is angling to become permanent Pentagon chief, with his closest supporters highlighting his role in key areas, like navigating internal politics to deliver a final Space Force proposal, helping to engineer billions in budget increases and working to pivot President Trump away from planned troop withdrawals in the Middle East that had initially alarmed military leaders.

But Shanahan's potential nomination has been met with skepticism on Capitol Hill, with lawmakers and staffers voicing reservations both privately and publicly that he, a longtime business executive with little government experience, might not be the best choice to succeed former Defense Secretary Jim Mattis, a retired four-star general.

Shanahan's reputation has also suffered from media reports and rumors that his ties to Boeing, his former employer of 31 years, could become problematic in the event he is nominated.

Reports have also indicated that Shanahan is a front-runner for a job that has a dwindling list of other potential nominees.

Mattis, who resigned in December amid objections to Trump's plan to pull U.S. troops out of Syria, is perceived as someone who could be a "firewall" against the president's rasher decisions, or "give him the Heisman," said one senior administration official, referring to the famous college football trophy depicting a ball carrier stiff-arming would-be tacklers.

Shanahan, the official said, approaches Trump like a business division president would approach a corporate CEO.

"You can't tell corporate to f-ck off -- corporate will always win," the senior administration official said. “If the president gives us a lawful and ethical order the department will follow it. The [acting] secretary is aligned with the president.  What [Shanahan] does is understand the president's strategic intent."

"It isn't resistance first, it's 'yes' first," a second senior administration official said.

Dealing with Space Force drama

For instance, if Trump were to say, "Build me a ladder to the moon," Shanahan starts at "Yes," and then works to provide analysis and options that try to block major disruptions by accurately assessing risk, the first official said.

That was essentially the case when Trump ordered the Defense Department to draw up plans for a new Space Force last summer.

Prior to Trump's order, Mattis and Air Force Secretary Heather Wilson had made it clear they opposed plans to create a separate military service focused on space.

DOD officials fell in line when the order came down, but it fell to Shanahan to begin coordinating plans for a final Space Force proposal, which the second senior administration official said could have easily been derailed by members of the White House's National Space Council lobbying for a separate military department.

"In September, there were parts of the White House that were adamant that Space Force equal a Department of the Space Force inside DOD," the official said. "They said there has to be a secretary of the Space Force."

Shanahan, meanwhile, pursued a range of options that highlighted concerns about cost and bureaucracy. He also made overtures to Vice President Mike Pence and his staff.

"We went up and said, 'Hey, Mr. Vice President, give us some time to give you some options,'" the official said. "The vice president said, 'Yes, do some analysis and come back with a recommendation.'"

Ultimately, Shanahan delivered a final recommendation that calls for the Space Force to reside as a small military service within the Air Force Department that can be separated in the future. Trump endorsed the plan and is sending it Congress.

The Air Force, meanwhile, fought the plan from start to finish, especially Wilson, who officials and congressional staffers said did not get along with Shanahan on a number of issues, including the Space Force.

Wilson's announcement last Friday that she would resign from DOD at the end of May, despite broad support among Republicans on Capitol Hill, is being interpreted by Shanahan's supporters to mean that the acting defense secretary outdistanced her as a potential rival for the top job.

"She knows she's not going to be defense secretary and doesn't want to work for Shanahan," a third government official said.

Wilson is expected to become president of the University of Texas at El Paso.

Boosting budgets

Shanahan's supporters also say he deserves credit for helping build the FY-20 defense budget, which features new investments in research and development aimed at countering the rise of China.

"China, China, China," the first official said.

The senior administration officials said the budget would be "bold," seeking $104 billion for research, development, test and evaluation, the largest RDT&E request in history.

"The 2020 budget proposal represents Secretary Shanahan's vision for the future of the department," DOD spokesman Lt. Col. Joe Buccino said. "What you'll find within the budget are investments in research and development, next-generation technology, and space and cyber capabilities that are intended to posture our military for the coming decades."

The senior officials said DOD would also ask for the largest shipbuilding budget in 20 years, a 14 percent increase in military space spending and a 10 percent increase in cyber funding across the department.

Additionally, the budget will include nearly $1 billion for artificial intelligence programs and $2.6 billion for hypersonics.

The officials said Shanahan was also on the front lines last year during negotiations to increase defense spending by $165 billion over FY-18 and FY-19.

"Mattis came in as the final closer and made the public statements, but Shanahan and Norquist were key players behind the scenes," the second senior administration official said, referring to acting Deputy Defense Secretary David Norquist, who previously served as Pentagon comptroller.

"Now you've got the same two guys in the seat who have been through this game once before on budget negotiations," the official said.

But the White House threw DOD a curveball on the FY-20 budget last fall when then-Office of Management and Budget Director Mick Mulvaney, currently Trump's acting chief of staff, called Shanahan and told him to prepare for an overall defense topline of $700 billion, a $16 billion cut from FY-19.

Again, Shanahan said "Yes." But he also worked with Mattis and GOP defense hawks to ensure that Trump would be aware of the "risks" associated with cutting defense below a planned topline of $733 billion, saying DOD would be unable to resource the National Defense Strategy and its new focus on great power competition with China and Russia.

"We spent the better part of four or six weeks going through analysis of what we would trade if we went down to $700 [billion]," the second official said. "Fundamentally, it's a matter of how fast you can modernize for great power competition."

In the end, Trump authorized a total defense budget of $750 billion, $17 billion more than what DOD had planned.

"That was a pleasant surprise," the official said.

Trump reverses on Syria

Mattis resigned in late December shortly after learning the president planned to immediately withdraw U.S. troops from Syria and possibly halve the 14,000-strong U.S. force in Afghanistan.

"My views on treating allies with respect and also being clear-eyed about both malign actors and strategic competitors are strongly held and informed by over four decades of immersion in these issues," Mattis wrote to Trump in his resignation letter. "Because you have the right to have a secretary of defense whose views are better aligned with yours on these and other subjects, I believe it is right for me to step down from my position."

Critics read Mattis' letter as a major rebuke to Trump, who announced that Mattis would be out of a job on Jan. 1, not the end of February like the former defense secretary has originally planned.

Shanahan took charge of DOD on Jan. 1 and, according to officials, began working immediately with Secretary of State Mike Pompeo and John Bolton, the national security adviser, who were aligned with Mattis and other military leaders in opposing the president's plans.

"DOD had a plan to enable continuity of mission," said the first senior administration official. "The world on Dec. 31, 2018, is a lot different than now. We were pulling out of Syria. We were pulling out of Afghanistan. Look where we are now."

Today, Trump has reversed course on the immediate withdrawals, opting instead to maintain a U.S. presence in Syria of about 400 troops (down from 2,000) and begin peace talks with the Taliban that could lead to a drawdown in Afghanistan within five years.

Critics, however, say the administration's foreign policy has become incoherent as the president announces one strategy on Twitter and his cabinet executes another.

When Shanahan tried to explain the administration's approach to Syria at the Munich Security Conference, he was excoriated by Sen. Lindsey Graham (R-SC), who said he would become the acting defense secretary's "adversary."

Shanahan, meanwhile, used that moment and the resulting headlines when he met with Trump at the White House to illustrate the risks associated with totally withdrawing from Syria by April 30.

"Our interests were aligned," the first senior administration official said of Shanahan's interaction with Graham. "It was not coordinated. But it actually ended up working out that way."

Capitol Hill skeptical

News of Shanahan's potential nomination has not been met with the same enthusiasm on Capitol Hill that accompanied Mattis' selection. Shanahan, who was confirmed as deputy defense secretary in July 2017, has little government experience outside his time at DOD.

Senate Armed Services Committee Chairman Jim Inhofe (R-OK) has said Shanahan lacks "humility" and predicted several weeks ago that he would not be the final nominee. Inhofe has since walked back his comments, but said he would prefer to have Mattis.

"I do like him, I've spent a lot of time with him and all that," Inhofe said of Shanahan in a wide-ranging discussion with reporters. "But if I had a choice between him and Mattis, you know . . . Mattis was my hero."

Shanahan has also been dogged by reports and rumors that he is unfairly favoring Boeing at the expense of other contractors, specifically Lockheed Martin, the maker of the F-35 Joint Strike Fighter. Shanahan has been critical of the F-35, but he has said his only "bias" is in favor of "performance."

Congressional staffers and lawmakers, meanwhile, have voiced support for Shanahan's team.

Along with Norquist as his deputy, Shanahan is flanked by Under Secretary of Defense for Acquisition and Sustainment Ellen Lord and USD for Research and Engineering Mike Griffin. Lord is a former Textron executive and Griffin is the former administrator of NASA.

Shanahan also found Dana Deasy and put his name forth to be DOD's chief information officer. Deasy previously worked as global CIO for JPMorgan Chase and is now focused on modernizing the Pentagon's information technology systems, specifically moving the department to cloud computing.

Shanahan's chief of staff is former Deputy Assistant Secretary of Defense for Industrial Policy Eric Chewning, who is popular among GOP lawmakers and staffers.

The question for senators, however, is whether Shanahan will be able to transition from his role as deputy defense secretary, basically the Pentagon's inward-oriented chief operating officer, to defense secretary, DOD's outward-facing chief executive.

Though some Capitol Hill staffers are skeptical of Shanahan as a nominee, several who spoke to Inside Defense agreed that he should not indefinitely serve as acting defense secretary.

"Nothing in his background qualifies him for this job, but I'll say this -- he can't serve as an acting, he needs to be the nominee if he is Trump's final choice," the staffer said. "We need one soon."

The official line from DOD is that current law allows Shanahan to do everything a Senate-confirmed defense secretary could do. But in private, senior administration officials say a final nominee is needed to strengthen America's global posture.

"He -- or someone -- needs to be able to talk to allies as the secretary of defense," a senior administration official said.

White House Press Secretary Sarah Huckabee Sanders was asked during a Monday press briefing whether Trump would nominate Shanahan this week.

"I'm not going to make any personnel announcements at this time," she said. "I can tell you that the president has a great deal of respect for Acting Defense Secretary Shanahan, he likes him, and when the president is ready to make an announcement on that front, he certainly will."