williams slides for swamos 061713

7/30/2019 Williams Slides for SWAMOS 061713

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U.S. Budgets for Defense and

Security

Cindy Williams

Principal Research Scientist

MIT Security Studies ProgramJuly 2013

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Main Points


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The United States spends more than $600 billionon defense each year, and close to one trilliondollars on national security

Defense spending grew markedly between 1998and 2010, and has dropped in real terms since

then The size of future defense budgets is uncertain Over the longer term, federal fiscal problems will

probably lead to significant cuts in defensebudget

Achieving the savings that are likely to be neededwill require significantly smaller forces and a shiftin national security strategy


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Overview of Talk

U.S. defense and security budgets in perspective

The Budget Control Act of 2011 and this years

sequestration

Federal fiscal pressures on the defense budget Cost growth inside the Department of Defense

Shaping forces under significant cutbacks

Budget Process 101: Planning and budgeting fordefense


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National Defense BudgetBillions of Current Dollarsa

Budget Function FY 2012 FY 2013 FY 2014Request

Department of Defense

Base Budget

War Budget

540

115

499

81

533

88b

Department of Energy

Nuclear Weapons 18 18 19

Defense-Related

Programs 8 8 8

050 National Defense 681 605 649

a Total discretionary plus mandatory budget authorityb OMB placeholder


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U.S. National Defense Outlays in

Perspective

Fiscal Year 2013, including cost of wars


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About 40 percent of total world defense spending

18 percent of federal outlays

52 percent of federal discretionary outlays

4.1 percent of gross domestic product (GDP)

Excluding wars, about 30 percent higher in real terms than in2000

Including wars, more than 50 percent higher in real terms

than in 2000 Significantly higher in real terms than Cold War average

Lower as a share of GDP than Cold War average


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6

40%

17%8%

4%

4%

3%2%

2%

2%

2%

16%

World Defense Spending in 2012

United

States

NATO Allies

China

Russia

Japan

Saudi Arabia

India

Brazil

South Korea

Australia

Rest of

WorldSource: The Military Balance 2013,.


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Non-DefenseDiscretionary

16%

NationalDefense

18%

Social Security22%

Medicare/caid20%

Other Mandatory17%

Interest6%

U.S. Federal Outlays in FY 2013(Total $3.7 Trillion)


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8

0

200

400

600

800

1000

1940 1950 1960 1970 1980 1990 2000 2010

Billio

nsofConstant2014Dollars

Fiscal Year

U.S. Outlays for National Defense


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9

0

5

10

15

20

25

30

35

40

1940 1950 1960 1970 1980 1990 2000 2010

Percent

Fiscal Year

U.S. Outlays for National Defense(Share of GDP)


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10

Security and International AffairsBudget Authority in Billions of FY 2014 Dollars

FY 2001 FY 2014

Request

National Defense

Base Budget

Wars

Total National Defense

416

0

416

561

88

649

Homeland Security

Total Homeland Security

HS Spending in Defense Department

Homeland Security Net of Defense Dept

21

5

16

73

17

55

International Affairs 27 46

Veterans Affairs 61 150

Total 520 900


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Budget Control Act of 2011

Put limits on security and non-security spending

for fiscal year 2012 to fiscal year 2021

Established a special Congressional committee to

develop a plan for reducing expected federaldeficits by $1.2 trillion over ten years

Established a poison-pill mechanism to take

those reductions automatically if necessary For FY 2013, required that the poison pill be

implemented through sequestration


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Sequestration

What it is: automatic cutbacks from appropriatedfunds that reduce every affected account by thesame percentage

Affected accounts: national defense except formilitary personnel; non-defense discretionary;some Medicare and other entitlements

How much in 2013: About 8 percent fromnational defense, 6 percent from non-defense

discretionary How long: Only for FY 2013; for next 8 years, the

administration and Congress have a choice


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0

100

200

300

400

500

600

700

2001 2006 2011 2016 2021

Discretionary

BudgetAuth

ority,FY2013

$B

Fiscal Year

Non-War National Defense Budget Under Presidents

FY 2013 and FY 2014 Plans and Budget Control Act

President's FY 2013 Plan


Budget Control Act


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Federal fiscal pressures

How did we get here?

How bad could it be?

What can be done about it?


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15

0.0

5.0

10.0

15.0

20.0

25.0

30.0

1962 1967 1972 1977 1982 1987 1992 1997 2002 2007 2012

Fiscal Year

Federal OutlaysPercent of Gross Domestic Product

National Defense

Non-Defense Discretionary

Mandatory

Interest


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16

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

1930 1940 1950 1960 1970 1980 1990 2000 2010

Fiscal Year

Outlays and Revenues as Share of GDP

(Percent)

Revenues

Outlays


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Measures to avert unsustainable

level of federal debt

Increase revenues above projections

Rein in entitlement spending

Rein in discretionary spending

Compared with current policy, need to shift4.8% of GDP by 2015 to keep debt at

todays level for 25 years


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20MIT Security Studies ProgramJuly 2013

0

100

200

300

400

500

600

700

2001 2006 2011 2016 2021Discretionary

NationalDefens

eBA,

FY

2013$B

Fiscal Year

Fiscal Sustainability May Require Cuts

Below BCA Levels


Budget Control Act

Proportional Budget Cuts

Equal Budget Cuts


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Budget pressures inside Defense

would push budgets upward

Rising costs of health care for service

members, families, and retirees

Growing costs of military pay and

allowances

Rising cost of civilian pay

Growing costs of new weapons


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Military

Personnel

26%

O&M

40%

Procurement

19%

RDT&E

13%

Other2%

DoD Non-War Budget Authority by

Appropriation Title, FY 2014 Plan


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25


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Army

24%

Navy

29%

Air Force

27%

Defense-wide

20%

Military Departments' Shares of

Defense Budget, FY 2014 Plan


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0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

FY 1980 FY 2000 FY 2010 FY 2014 FY 2018

Plan

Military Departments' Shares of

Total Budget for the Services

Air Force

Navy

Army


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Possible Force Structure Options

Current

Plan

Option 1 Option 2

Budget Reduction ---- -10% -16%

Distribution of Cuts ---- Proportional Rebalance

toward Asia

Active Army Brigades 37 32 (-14%) 26 (-30%)

Navy Ships 300+ 250 (-17%) 235 (-22%)

Active Marine Corps

Divisions

3 2+ 2+

Air Force Tactical Squadrons 54 47 (-13%) 42 (-22%)

Active-Duty End Strength

(millions)

1.3 1.2 (-10%) 1.1 (-17%)


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Planning and Budgeting for DoD


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Three Players

Department of Defense

White House Congress

The process takes more than two years


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DoD works on three budgets at a time


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FY 2013 budget: in execution today, under

sequestration

FY 2014 budget: submitted two months late to

Congress, in April 2013; request is underconsideration there

FY 2015 budget: services now finishing work on their

program objective memoranda (POMs); Office of

Secretary of Defense will hold an integrated program

and budget review this summer and fall

DoDs internal process:


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DoD s internal process:Planning, programming, budgeting,

and execution (PPBE) Creates Presidents Budget (one-year) and

Future-Years Defense Program (FYDP, five

years) Takes guidance from Quadrennial Defense

Review (QDR), which must be submitted to

Congress in February of second year of eachpresidential term


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Purposes of PPBE


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Executive management

Civilian control of military

Resource allocation

Determine centrally where the money goes Rational process for exploring priorities and tradeoffs

Make decisions based on explicit criteria of nationalstrategy, not compromises among institutional forces

Consider requirements and costs simultaneously Consider multi-year plan, to project consequences ofpresent decisions into the future


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DoDs PPBE for FY 2015

Planning phase (notional calendar)

Nov 2012

to Apr 2013

Defense Planning and

Programming Guidance

(DPPG): priorities, broad

guidance for capabilities,

detailed guidance onprograms (consistent with

National Security

Strategy, QDR)

Strategic Planning

Council (SPC),

Secretary of

Defense

Apr 2013 Fiscal guidance to

services

OSD CAPE, with

Comptroller


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DoDs PPBE for FY 2015

Programming and Budgeting (notional)

Apr to July

2013

Program Objective Memoranda (POMs),

Budget Estimate Submissions (BESs)

Services,

Agencies

Aug to Oct

2013

Integrated Program Review (policy) and

Budget Review (pricing, executability)

OSD CAPE,

Comptroller;

JCS; OMB

Nov 2013 Final Program Decision Memoranda

(PDMs) and Program Budget Decisions

(PBDs) to Services

Signed by

Deputy

Secretary

Jan 2014 Presidents Budget and Future YearsDefense Program (FYDP) to OMB

OSD

Feb 2014 Presidents Budget and Future Years

Defense Program (FYDP) to Congress

OMB


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Planning and budgeting in the White

House

National Security Staff: Writes the nationalsecurity strategy

Office of Management and Budget (OMB)

Develops fiscal guidance for federal departments(two years ahead of budget year)

Participates directly in the DoDs internal budgetreview process

President: signs authorization andappropriation bills into law


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Planning and budgeting in Congress

Four main processes

Concurrent resolution on the budget (guides

Congress; not a law)

Reconciliation (only for revenues andentitlements)

Authorization (establishes organizations and

policy; authorizes for appropriation) Appropriation (provides funds)


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Authorizing

Committee

Budget

Committee

CBO

Presidents

Budget request

Joint Economic

Committee

Conference

Analysis

Recommendations

on Fiscal policy

Estimate of spending

and revenues in

jurisdiction

House/Senate

Floor

Concurrent Budget

Resolution and

Conference report

Reconciliation

Instructions

Authorizing

Committee

Budget

Committee

Budget

Resolution

Conference

SubcommitteesHouse/Senate

Floor

Budget

Authority

Authorizing

Committee

Appropriations

Committee

Reconciliation

Bill

Appropriations

Bill

Conference

House/Senate

Floor

White House

Conference

House/SenateFloor

Authorization

Bill


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FY 2014 Budget in Congress

Notional ScheduleFeb 2013 Presidents Budget Submitted by President

April 2013 Concurrent BudgetResolution

Budget Committees; floor votes;conference committees; floorvotes

Spring to fall

2013

Defense Authorization:

Hearings, Markup, Votes

Armed Services Committees; floor

votes; conference committees;floor votes; to President forsigning

Spring to fall2013

Defense, MilitaryConstruction and Veterans:Hearings, Markup, Votes

Appropriation Subcommittees;floor votes; conferencecommittees; floor votes; toPresident for signing

Oct 1, 2013 Begin 2014 fiscal year

FY 2014 Emergency supplementalappropriations as needed

Appropriation Subcommittees;floor votes; conferencecommittees; floor votes; toPresident for signing


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Where the FY 2014 defense budget

stands in Congress this month


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Budget Resolution House passed its version on March 21

Senate passed its version on March 23

National Defense Authorization Act House bill passed on June 14

Mark-up passed Senate Armed Services Committee onJune 14

Defense Appropriation Act Markup passed House Appropriations Committee on

June 12

No action yet in full committee of Senate


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Back-Up Slides


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MIT S it St di P 41

0

100

200

300

400

500

600

700

800

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

BillionsofD

ollars

Fiscal Year

The $487 Billion ReductionChange from FY 2012 Plan to FY 2013 Plan

Extended FY 2012 plan

Extended FY 2013 plan

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