Tracking the Defense Budget: US Defense Budget Cuts, Sequestration, the FY2014 Budget, and the FY2014-FY2022 Forecast

July 15, 2013

The US is now in the process of four years of defense cuts, and faces major challenges in shaping its future defense budgets. The Burke Chair has completed a survey of recent, current, and projected trends in US defense spending – and the key uncertainties involved.

This document is entitled Tracking the Defense Budget: US Defense Budget Cuts, Sequestration, the FY2014 Budget, and the FY2014-FY2022 Forecast, and is available on the CSIS web site at https://csis-website-prod.s3.amazonaws.com/s3fs-public/legacy_files/files/publication/130715_trackingthedefensebudget_ppt.pdf.

The report is designed to act as reference, rather than suggest changes or reforms. It draws on the key trends and charts present in material developed by the Department of the Defense, US military services, OMB, the Congressional Accountability Office, and Congressional Budget Office to provide a close to an official overview of US defense spending as available unclassified material presents.

It does, however, look beyond a narrow focus on the FY2014 budget and sequestration. Specifically, it examines the following issues:

• Trends in US defense spending relative to entitlements and other discretionary spending, and the initial impact of the cuts Secretary Gates began to make in FY2010: In spite of two wars after 2001, the US defense burden on the GDP is far lower than during the Cold War, and no amount of cuts in defense spending can end budget deficit and debt problems driven by rising entitlements costs.

• Ongoing and Uncertain Impact of Gates-Panetta Cuts Made before Sequestration: FY 2011-FY2013: While most current attention focuses on sequestration, cuts in defense spending began long before FY2013 and were programmed through FY2017. There is far less tolerance for cuts than would be the case if sequestration had been imposed on defense spending without the impact of such prior cuts.

• Congress continues to complicate effective defense cuts, and planning, programming, and budgeting. Efficiency and reform requires changes in congressional add-ons and restrictions in areas like BRAC.

• Sequestration has had a major impact on FY2013 spending. Some DoD reporting may have exaggerated its near term impact, but that impact is serious and growing.

• Sequestration will have a critical impact on US ability to fund a viable strategy if it is extended beyond FY2013.  US defense official and officers summarize the impact of sequestration and spending cuts on US strategy.
• The President’s FY 2014 Budget Request Goes at Least $52 Billion Beyond Sequestration Limit: The President’s FY2014 defense budget request goes well above the limits imposed by the Budget Control act.

• Secretary Hagel’s Warnings to Congress of the Impact of Sequestration if It Insists on Budget Control Act Levels beyond FY2013. The Secretary makes it clear that continued cuts at the budget control levels would have a critical impact on US capability to carry out US strategy, readiness, manpower, and procurement.

• Key Dollar Impacts of the FY 2014 Request - The overall impact of current cuts on total defense spending, and Army, Navy, Marine Corps, and air Force spending: Survey of the key trends and impacts of the Future Year Defense spending program put forth in the FY2014 budget request defense-wide and by service covering force and manning levels, RDT&E, and procurement. The surveys show the longer-term impact of spending cuts and that US military programs are increasing dollar-driven with little adaptation as yet to the new US strategy.

•  Budget Cuts Are Only Part of the Problem: Continued Cost Escalation Could Equal the Impact of Planned Cuts or Sequestration: CBO and other estimates warn that the real problems the US faces are far greater than simply the impact of sequestration. The Department is still undergoing systemic cost escalation at levels as damaging as the impact of the Budget control act.

• Procurement Plans versus Procurement Realities: CBO, GAO, and DDR&E reporting all show that procurement reform has so far failed to create stable and effective procurement plans and control costs. Procurement threats to be a source of “force subtractors” rather than a source of “force multipliers.”

Other recent Burke Chair reports on US strategy include:

• The Search for Regional Stability and Learning from the "Non-Wars" Against "Non-Terrorism": http://csis.org/publication/search-stability-and-non-war-against-non-terrorism

• The New US Strategy, the FY2013 Defense Budget, Sequestration, and the Growing Strategy-Reality Gap: https://www.csis.org/analysis/new-us-strategy-fy2013-defense-budget-sequestration-and-growing-strategy-reality-gap.

• Challenges and Opportunities in the CENTCOM AOR: https://www.csis.org/analysis/challenges-and-opportunities-centcom-aor