Pentagon budget drop anticipated

The projection comes as senior defense authorizers from both parties raise concerns about budget constraints shaping Pentagon spending in fiscal 2011 and several years beyond.

“The picture is not a pretty one,” Rep. Ike Skelton (D-Mo.), the chairman of the House Armed Services Committee, said in his opening statement Wednesday at a hearing on future defense budgets.

Ranking member Buck McKeon (R-Calif.) raised alarm over a “dramatic decline” in funding for weapons systems — from 35 percent of the overall defense budget in fiscal 2010 to 24 percent in 2020.

“I’m increasingly concerned that efforts to balance the Pentagon will result in a department in decline,” he said. “The victim of a lower defense budget, as we will hear from our witnesses, will be procurement and R&D [research and development] accounts.”

By 2015, defense spending is projected to amount to 3.5 percent of the GDP and decline to 2.6 percent by 2028 based on the Pentagon’s current plans, according to Matthew Goldberg, the acting assistant director of the Congressional Budget Office (CBO).

Defense spending amounted to 5.6 percent of the GDP in the 1980s, then dropped to 3.8 percent in the 1990s and rose to 4 percent in 2008. That 4 percent includes emergency supplemental funding, said Goldberg. Even if unbudgeted costs are included, defense spending would still drop to 3.8 percent in 2015 and would not surpass 3.1 percent by 2028.

CBO also projects that carrying out the Pentagon’s plans in its 2010 budget request — excluding overseas contingency operations in Afghanistan, Iraq and elsewhere — would require defense resources averaging $567 billion annually (in constant 2010 dollars) from 2011 to 2028. That amount is about 6 percent more than the $534 billion the Obama administration requested for the 2010 budget, excluding overseas contingency funds, according to Goldberg.

Reasons why more resources would be required in the long run include the likelihood of growing military pay and benefits; a projected increase in the cost of operating and maintaining aging equipment as well as newer and more complex systems; plans to develop advanced weapons systems to replace aging ones; and investments in advanced intelligence, surveillance and reconnaissance systems to meet emerging security threats.

Goldberg stressed that CBO projections could change, particularly if unbudgeted costs are taken into consideration.

“The inclusion of total unbudgeted costs increases the projection to an annual average of $624 billion through 2028, or 17 percent more than the regular funding requested for 2010,” he said. “Some 38 percent of the total unbudgeted costs between 2013 and 2028 are associated with overseas contingency operations.”

Stephen Daggett, a Congressional Research Service specialist in defense policy and budget, indicated the Pentagon may need to discuss budget trade-offs over the next decade in the Quadrennial Defense Review, a sweeping analysis of military strategy and capabilities. The results of the QDR are expected to coincide with the 2011 budget request in February.

Daggett suggested pressures brought about by the unprecedented U.S. budget deficit will affect military spending.

“Budget projections over the next 10 years show potential budget deficits as a percentage of GDP that have, in the past, been followed by long-term limits on defense spending,” Daggett said in his testimony to the committee.

The deficit for fiscal 2009 was a record $1.4 trillion, and Congress is expected to raise the country’s legal debt limit to $13 trillion.

“The alternatives to a steep reduction in acquisition accounts are a resumption of at least modest real growth in the overall defense budget; cuts in the size of the force or measures to reduce operating costs,” he added. Each 2 percent increase in the defense budget above inflation would add about $10 billion in funds available for acquisition accounts, while a cut of 100,000 active-duty troops would save $12 billion to $15 billion per year in military personnel and in directly related operational and maintenance costs, according to Daggett.

“A smaller force would entail limits on U.S. military capabilities — one choice might be to reduce requirements for ground forces for long-term stability operations,” he explained.

Daggett also said changes in major weapons programs announced by Defense Secretary Robert Gates in April could “provide an impetus” to improve efficiency in weapons production.

For example, the Defense Department has narrowed production of tactical fighter aircraft to two jets — various versions of the Boeing F/A-18 Navy-Marine fighter and of the multiservice, multinational Lockheed F-35 Joint Strike Fighter. In shipbuilding, the effect of recent decisions may be to allow fairly long and relatively large production runs of DDG-51 destroyers, the Littoral Combat Ship (LCS); of new ships based on the LPD-17 amphibious ship; and of Virginia-class submarines, according to Daggett. The termination of the Transformational Communications Satellite (TSAT) program will spur reliance on improved designs of existing technologies.

“To the extent the changes result in regular, predictable and robust annual production runs of technologically mature systems with stable designs, both acquisition officials in the government and production teams in industry might focus on efficiency measures,” Daggett said.