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Obama’s CIA Designee Sought CIA Cuts, Threatened Director

Panetta Wanted to Punish Clinton's CIA Director for Fending Off Cuts

Barack Obama is set to name Leon Panetta as the next Director of the Central Intelligence Agency. In light of that fact, it’s worthwhile to look pack at Panetta’s relationship with the agency (and its Director) when he was the Director of Bill Clinton’s OMB, and later his Chief of Staff.

When Jim Woolsey became Bill Clinton’s CIA Director in 1993, he elected to build on an intelligence community reform put in place by his predecessor (current SecDef Bob Gates). He wanted to improve the CIA’s cooperation with the Department of Defense. But in doing so, he ran afoul of Panetta.

From the CIA Library:

Woolsey was determined to work closely with the new leaders of DOD in fulfilling his duties as DCI. He had dealt extensively with defense issues through the years, knew the key senior officials appointed to head DOD, and like Gates believed that close collaboration with them was a key to fulfilling his own responsibilities as DCI. In particular, Woolsey pressed for progress in developing unmanned aerial vehicles for reconnaissance in close cooperation with DOD. He used CIA requirements as a base for experimenting with such systems within the agency, but he had in mind the broader purpose of demonstrating their utility to DOD for development and procurement on a larger scale for US military use. Indeed, DOD created a Defense Airborne Reconnaissance Office (DARO) in December 1993 to pursue just such ideas. In effect, the NRO could now concentrate on space systems, and airborne programs enjoyed separate status and support within DOD.[5]

Woolsey also used DOD as an ally in preparing and defending the Intelligence Community’s program and budget. Leon Panetta, the Clinton administration’s first director of OMB, had indicated to Woolsey early in 1993 that OMB was considering providing the DCI with top-line guidance, perhaps with a publicly disclosed figure, and seeking sizable out-year cuts in intelligence spending. Woolsey also faced skeptical audiences in Congress anxious to find an additional “peace dividend” in intelligence spending as well as in the larger defense budget. From Woolsey’s perspective, he had the unenviable task of managing declining intelligence budgets in an era of multiplying intelligence targets (the “poisonous snakes”) [in this regard, he seems to have been prophetic -- bf], and he did not wish to see each intelligence agency develop its own downsizing plan in isolation. Downsizing in fact offered the DCI an opportunity if he could use it as an incentive to advance community integration.

Woolsey was willing to accommodate such pressures to some degree (among his first major decisions as DCI were cancellations of major collection programs no longer viewed as affordable), but he fought tenaciously to limit the cuts and to justify what he considered a responsible level of NFIP spending. This stance earned him in March 1993 press attention that unfairly portrayed him as not on board with overall administration policy.[6] In April he wrote to the president, giving him a carefully framed explanation of how his planned program—despite a near-term increase—would achieve the five-year savings goals Clinton had set for intelligence. The spending issue at times preoccupied Woolsey, and it reinforced his inclination to cleave closely to DOD.

Woolsey advanced cooperation on program and budget matters by constructing a process of “joint review” of major intelligence programs by himself and the deputy secretary of defense (initially William Perry, then John Deutch). One goal he sought was integration across intelligence programs, and another was integration of efforts between DOD and DCI areas of responsibility (these had been Gates’s goals as well). He devised an informal arrangement whereby either he or the deputy secretary would wear a baseball cap signifying chairmanship of their joint meeting depending on whether the topics were NFIP (the DCI’s responsibility) or TIARA (the deputy secretary’s responsibility).[7] His partnership efforts resulted in jointly agreed NFIP and TIARA budgets, although they did not succeed entirely in fending off continuing pressure for cuts.[8]

In the fall of 1993 Woolsey and Perry agreed to the formation of a new defense intelligence program called the Joint Military Intelligence Program (JMIP), which was to cover DOD-wide programs of various kinds that were not appropriate for the NFIP but needed to be better managed than they were in TIARA, the aggregation of tactical intelligence programs in DOD. This new defense intelligence program was initiated in the spring of 1994, and DOD also established a Defense Intelligence Executive Board (DIEB) chaired by the deputy secretary of defense to consider and make recommendations on defense intelligence programs. Woolsey readily accepted Deutch’s invitation to be a member of this board.

Woolsey, who understood the value of trying to improve OSD management of DOD’s disparate intelligence programs, agreed to these initiatives without any apparent concern that they might pose problems for the DCI’s own leadership of NFIP programs such as the NRO. The move did raise the issue of whether the GDIP belonged in the JMIP or should remain as part of the NFIP, but it was agreed to keep it as a more “national” program under DCI auspices. Also, the DIEB’s charter explicitly stated that any issues with implications for the NFIP would be referred to the DCI, thus protecting the DCI’s community-wide program and budget role.

Woolsey’s aggressive defense of the NFIP came at some cost in his relationships with OMB and the White House. From OMB’s perspective, he came across as confrontational in his efforts to keep OMB from examining, and possibly cutting, his budget. One of Panetta’s senior staff officers commented on Woolsey’s approach in dealing with Panetta: “I’ve never seen a more graceless stonewall….”[9] Richard Haver, the CMS chief whom Woolsey had inherited from Gates and had kept on during his tenure as DCI, recalled an episode in which the DCI and DOD leaders, in a personal meeting with President Clinton, gained the president’s agreement—over OMB objections—to a program and budget Woolsey had worked out in concert with DOD. The DCI was almost euphoric about his success as he returned to CIA headquarters, but he soon received a message from Panetta that Woolsey would “pay” for his budget victory. Thus, Woolsey’s efforts to protect the community’s set of programs, while successful in earning presidential approval, took place in a setting where key presidential subordinates came to resent his role.

Panetta went on to become chief of staff to President Clinton. When in 1994 noisy controversies arose on Capitol Hill about how the new NRO headquarters building had been treated in budget presentations and how the NRO’s “forward funding” practices for major collection programs had built up a huge surplus, Woolsey was not in a position to count on White House support. Also, in 1994 OMB tried to push for a role in shaping the intelligence budget more along the lines of its greater involvement in the larger DOD budget, and Woolsey—concerned about OMB’s desire for cuts in intelligence and defense—stuck with the DOD partnership as his best strategy for keeping OMB at bay and saving his program from even greater cuts.

Panetta’s tenure at the White House — both as Director of OMB and as Chief of Staff — was apparently characterized by a constant tension between him and the CIA, with his desire for deeper budget cuts being the running theme. CIA Director Woolsey had to form alliances with the Defense Department to fend off these deep cuts, as well as to ensure that the CIA retained some ability to track an expanding number of threats in a multipolar world.

Was Panetta wrong about the threats the U.S. faced in the 1990s, or was he simply too limited by his green eyeshades to give proper attention to national security? Either way, the picture isn’t pretty. Panetta has a lot of questions to answer.

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