Prospects For DoD's Budget Over The Next Decade
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Transcript of Prospects For DoD's Budget Over The Next Decade
Congressional Budget Office
Prospects For DoD's Budget Over The Next Decade
January 24, 2014
David E. Mosher
Assistant Director of CBO for National Security
Presentation to TechAmerica Procurement Policy Meeting
1 C O N G R E S S I O N A L B U D G E T O F F I C E
Outline
• Fiscal Situation
• Implications of Budget Control Act
• Internal Pressures on DoD's Budget
• Approaches for Scaling Back DoD’s Plans
2 C O N G R E S S I O N A L B U D G E T O F F I C E
Deficits or Surpluses Under CBO's Baseline
for FY 2014
CBO's Baseline
Projection
Percentage of GDP
Source: Congressional Budget Office, Options for Reducing the Deficit: 2014-2023, November 2013. An updated version of
this figure appears in Congressional Budget Office, The Budget and Economic Outlook: 2014 to 2024, February 2014.
3 C O N G R E S S I O N A L B U D G E T O F F I C E
Outline
• Fiscal Situation
• Implications of Budget Control Act
• Internal Pressures on DoD's Budget
• Approaches for Scaling Back DoD’s Plans
4 C O N G R E S S I O N A L B U D G E T O F F I C E
Projected Costs of DoD’s FY 2014 Plans Compared with Funding Caps
Billions of FY 2014 dollars
Source: Congressional Budget Office, Long-Term Implications of the 2014 Future Years Defense Program, November 2013
The gap between DoD’s FYDP plans and the BCA caps averages about $60 billion to $90 billion a year
5 C O N G R E S S I O N A L B U D G E T O F F I C E
Outline
• Fiscal Situation
• Implications of Budget Control Act
• Internal Pressures on DoD's Budget
• Approaches for Scaling Back DoD’s Plans
6 C O N G R E S S I O N A L B U D G E T O F F I C E
CBO's Projection of FY 2014 Defense Budget
Request by Appropriation Title
Billions of FY 2014 dollars
Source: Congressional Budget Office, Long-Term Implications of the 2014 Future Years Defense Program, November 2013
7 C O N G R E S S I O N A L B U D G E T O F F I C E
Each of the Three Major Categories of the Defense Budget Has Its Own Momentum
■ Costs of developing and buying weapons have been, on average, 20 percent to 30 percent higher than DoD’s initial estimates
■ Costs of operation and maintenance per active-duty service member have been steadily increasing since at least 1980, excluding the cost of the wars in Iraq and Afghanistan
■ Costs for compensation of military personnel – including health care benefits for service members and retirees– have been rapidly increasing since 2000
The mismatch between DoD’s plans and the BCA caps is accentuated by these internal pressures in DoD’s budget
8 C O N G R E S S I O N A L B U D G E T O F F I C E
Example of Cost Growth in Acquisition Programs: The Navy’s Shipbuilding Program
Source: Congressional Budget Office, An Analysis of the Navy’s Fiscal Year 2014 Shipbuilding Plan, October 2013
9 C O N G R E S S I O N A L B U D G E T O F F I C E
Example #2: Growth in O&M per Active-Duty Service Member
Source: Congressional Budget Office, Long-Term Implications of the 2014 Future Years Defense Program, November 2013
10 C O N G R E S S I O N A L B U D G E T O F F I C E
Growth in Pay and Benefits of Military Personnel: The Military Medical System
Billions of FY 2014 dollars
Source: Congressional Budget Office, Long-Term Implications of the 2014 Future Years Defense Program, November 2013
11 C O N G R E S S I O N A L B U D G E T O F F I C E
Outline
• Fiscal Situation
• Implications of Budget Control Act
• Internal Pressures on DoD's Budget
• Approaches for Scaling Back DoD’s Plans
12 C O N G R E S S I O N A L B U D G E T O F F I C E
CBO Examined Four Approaches to
Scaling Back DoD’s Plans ($90 billion/year gap) Sources of Reductions (Billions of 2013 dollars)
0
20
40
60
80
100
120
140
0
20
40
60
80
100
120
140
2013 2014 2015 2016 2017 2018 2019 2020 20210
20
40
60
80
100
120
140
Reduction from Cuts to Force StructureReduction from Cuts to AcquisitionReduction from Cuts to Operations
2013 2014 2015 2016 2017 2018 2019 2020 20210
20
40
60
80
100
120
140
0
20
40
60
80
100
120
140
Option 1:
Preserve Force Structure; Cut Acquisition and Operations
Option 2:
Cut Acquisition and Operations; Phase in Reductions in Force Structure
Option 3:
Achieve Savings Primarily by Cutting Force Structure
Option 4:
Reduce Force Structure Under a Modified Set of Budget Caps
ReductionsRequired UnderExisting Caps
Source: Congressional Budget Office, Approaches for Scaling Back the Defense Department’s Budget Plans, March 2013
13 C O N G R E S S I O N A L B U D G E T O F F I C E
Illustrative Force Structure Reductions for
Selected Unit Types Under CBO Options
Active and Reserve Units under DoD’s Plans for 2017
BCTs Carriers Amphibious
Ships Marine
Regiments Fighter
Sqdns** Airlift
Sqdns**
Planned force, 2017
66 11 33 11 93 20
Cuts Under the Options by 2021 (CBO’s Cost Projection*)
Option 2 7 1 4 2 11 3
Option 3 16 3 8 3 22 5
Illustration assumes that reductions are spread evenly across all four services.
* Reductions are about one-third smaller under DoD’s costing assumptions.
** Air Force squadrons (sqdns) are notional units consisting of 12 aircraft.
Source: Congressional Budget Office, Approaches for Scaling Back the Defense Department’s Budget Plans, March 2013
14 C O N G R E S S I O N A L B U D G E T O F F I C E
Bibliography of Related CBO Studies
■ Costs of Military Pay and Benefits in the Defense Budget (November 2012)
■ Approaches for Scaling Back the Defense Department’s Budget Plans (March 2013)
■ An Analysis of the Navy’s Fiscal Year 2014 Shipbuilding Plan (October 2013) – Latest of annual series
■ Long-Term Implications of the 2014 Future Years Defense Program (November 2013) – Latest of annual series
■ Approaches to Reducing Health Care Spending by the Department of Defense (January 2014)