The U.S. Defense Budget in FY2019: Underlying Trends
August 23, 2018
The Burke Chair is issuing a broad survey of the major trends in the FY2019 U.S. defense budget as reported from the time the President made his original budget request in February 2018 to full Congressional mark-up of the National Defense Authorization Act (NDAA) and the President's signature in July 2018. It is entitled The U.S. Defense Budget in FY2019: Underlying Trends, and is available on the CSIS web site at https://csis-website-prod.s3.amazonaws.com/s3fs-public/publication/180823_Defense_Budget_Trends.Report.pdf?3Ay55APbl9N3F25gaQCWVQDPyDx9.eHh.
The report draws on a wide range of official sources and is designed to provide an overview of official reporting on major trends rather than make an independent analysis. The U.S. provides a vast amount of detail on its annual budget request for military and international affairs spending – much of it in graphic, tabular, and summary form. The material presented here is an attempt to pick the key materials to show where the U.S. is focusing its military spending, how it relates to its strategy, how major force improvements will affect U.S. capabilities, and how the U.S. is dealing with its strategic partners and potential threats.
However, the user should be aware that much of the material presented is often uncertain and is not comparable from source to source. There also is no easy or single way to summarize the trends in the U.S. defense budget. The materials that go into just the unclassified portions of the Department of Defense’s annual submission of President’s budget request to Congress, and the subsequent Congressional review of that request, run well over several thousand pages.
It is also critical for the reader to understand that only the portion of the report dealing with the National Defense Authorization Act (pages 24-43) represents the final result of Congressional action and the FY2019 budget signed by the President, and not all of the portions of reference action by the key Committees involved were approved in exactly the form shown in the final bill signed by the President. Much of the material is drawn from sources that precede the final Congressional markup because the Department never updates most of the tables and charts in the Department of Defense request until the following year and new budget submission.
The material presented also shows that different sources define total defense spending in different ways, and include different expenditures and convert current to constant dollars in different ways.
More importantly, most sources report in terms of “Budget Authority” (BA) – the total money the Congress authorizes in a given Fiscal Year that can be spent over a period of years. This is the best estimate of what the Congress is actually approving.
However, some sources in terms of “Budget Outlays” (BO) – only the money that can be spent in 12-month period of that U.S. Fiscal Year. (Which begins on 1 October of the year the Congress acts upon, and ends on 30 September of the following year). This is the best way of assessing the impact of spending on how well the budget is balanced, the size of the deficit, and impact on the federal debt.
Budget projections for future years present other problems. The Congressional Budget Office (CBO) provides detailed estimates of how the President’s budget request – and the final budgets the Congress authorizes – will impact over time. Many such estimates precede Congressional action on the budget, and it then takes several months for the CBO to estimate the probable future trends in the total federal budget and impact of the final Congressionally approved levels of U.S. defense spending on that total federal budget and the U.S. GDP. This often creates major lags in official estimates of the trends in every aspect of federal spending, the budget deficit, and the national debt.
More broadly, the Department of Defense has effectively abandoned any serious effort to create a program budget, and to provide a realistic estimate of the cost of the Future Year Defense Program beyond the fiscal year directly under review. It essentially rolls forward current activities and plans to make estimates of the next four years that are based on the spending levels in the budget year under review. It bases such estimates largely on input categories such as personnel, O&M, RDT&E, and procurement.
The Department of Defense does not report expenditures by major mission or command. The Department defines “strategy” largely in terms of broad concepts and goals. It does not tie its “strategy” to net assessments of the balance in terms of threats and strategic partners, to specific force plans, to specific actions and schedules, to specific costs, or to measures of success and effectiveness. Unclassified reporting in “PPB” – or planning, programming, and budgeting– form has become a functional oxymoron.
The Congress does hold strategy hearings and directs studies of key strategic issues, but these efforts rarely address any of the practical details of any aspect of the nature and cost of U.S. strategy. Similarly, the outyear estimates of military spending by the Department of Defense, OMB, and the Congressional Budget Office (CBO) focus on a “baseline” that assumes the United States does not actually use its military forces in any operational form. The limited estimates provided for future Overseas Contingency Operations are “placeholders” and not actual estimates.
This is partly inevitable given the inability to predict the future, but it creates a practical problem in a country whose civil plans call for major future increases in mandatory spending on retirement, medical case, and welfare. This means the official U.S. projections of civil spending rise relative to military spending in ways history indicates will be highly unrealistic.
Anthony H. Cordesman holds the Arleigh A. Burke Chair in Strategy at the Center for Strategic and International Studies in Washington, D.C. He has served as a consultant on Afghanistan to the U.S. Department of Defense and the U.S. Department of State.