22 March 2012

Setting the Stage The Last 12 Months

Secretary Gates efficiencies ($100B) and reductions ($78B)

POTUS April 2011 deficit speech…cut $400B in defense over 12 years and conduct strategy review…amended by OMB to 10 years

Budget Control Act of 2011…to comply with discretionary caps, Defense cut $487B over 10 years, and potentially an additional ~$500B with sequestration

FY12 budget ($203B, Army) enacted 23 December 2011 – Followed five Continuing Resolutions

– ~$13B below President’s Budget (PB) Request ($216B)

POTUS and Secretary Panetta announce defense strategy 5 January 2012

FY13 PB ($185B, Army)…topline submitted without sequestration

“We developed a defense strategy that transitions our defense enterprise from an emphasis on today’s wars to preparing for future challenges, protects the broad range of U.S. national security interests, advances the Department’s efforts to rebalance and reform, and supports the national security imperative of deficit reduction through a lower level of defense spending.”

INTRODUCTION TO DOD’S STRATEGIC GUIDANCE, JANUARY 2012

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Setting the Stage Federal Spending

Mandatory

Net Interest

Non-Defense Discretionary

Defense Discretionary

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Defense Discretionary

49%

Non-Defense Discretionary

18%

Mandatory

26%

Net Interest7%

FY62

Defense Discretionary

17%

Non-Defense Discretionary

14%Mandatory63%

Net Interest6%

FY13 est

Defense Discretionary

12%

Non-Defense Discretionary

12%

Mandatory65%

Net Interest11%

FY17 est

Source: Fiscal Year 2013 Historical Tables, Budget of the U.S. Government

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.0 M

1.0 M

2.0 M

3.0 M

4.0 M

5.0 M

6.0 M

7.0 M

8.0 M

$ B

$100 B

$200 B

$300 B

$400 B

$500 B

$600 B

$700 B

$800 BDoD Military Manpower DoD Total Manpower DoD $ (FY12 Constant $) FY01-17 Base (FY12 Constant $)

Korean War

Armistice (1953)

Vietnam War

Ends (1973)

Height of

Vietnam War

(1968)

Gulf War

Ends (1991)

Height of

Cold War

(1985)

9/11

(2001)

The Defense Budget

• Discretionary spending is ~35% of total federal budget – Defense budget is ~50% of discretionary spending

• Increasing emphasis on reducing spending/deficit – Congress and the Administration

• Historically, funding levels have decreased as military demand decreases

OCO

?

End

Strength

Ramp

4

$297 $328$365 $377 $400 $411 $432

$480$513 $528 $528

$531 $525$19$17

$72$91

$79$124

$169

$187$154

$163 $159$115

$316$345

$437$468 $479

$535

$601

$667 $667 $691 $687$646

$613

$88

$ B

$100 B

$200 B

$300 B

$400 B

$500 B

$600 B

$700 B

$800 B

FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13

DOD Base DOD Supp/OCO DOD OCO Request

Defense Funding

Appropriation

Request

Execution

5

$78 $84$97 $103 $103 $105 $112

$131$143 $144 $140

$135 $135

$26 $40

$64 $72

$109

$121 $92 $99 $100

$68 $50

$78$86

$123

$143

$167$177

$221

$252

$235$243 $240

$203

$185

$ B

$50 B

$100 B

$150 B

$200 B

$250 B

$300 B

FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13

Base OCO OCO Request

The Army Budget

Appropriation

Request

Execution

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Supports Army’s Role in the Defense Strategy

Trains and equips Soldiers and units to win the current fight and maintain a high level of readiness

Recruits and sustains our high-quality All-Volunteer Army – Soldiers, Civilians, and Families

Supports modernization priorities – the network, combat/tactical vehicles, aviation, and Soldier systems

Funds ongoing military operations, sustainment, and force protection in support of Operation Enduring Freedom

Resets our Soldiers, units, equipment, and Families

Invests in enterprise initiatives, including energy efficiency, audit readiness, and reducing the cost of doing business

Army FY 2013 Budget Overview

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FY13 President’s Budget Request

Base $134.6B

OCO $50.1B

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Summary

Supports the essential roles of the Army as the best led, best trained, best equipped ground force in the world Continues to meet our commitments in Afghanistan and around the

world

Develops the Army for the future as part of the joint force – a smaller, leaner force that is more agile, flexible, and technologically advanced

Continues to care for Soldiers and Families – maintains a commitment commensurate with their service and sacrifice

Begins to reduce Active Component end strength and invests in the Reserve Component as an operational force within the base budget

Supports Army modernization priorities and systems integration

AMERICA’S ARMY THE STRENGTH OF THE NATION

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