The Defense Budget: Current Status and Core Issues

Katina Slavkova | May 3, 2022

Defense officials are already busy making the obligatory annual rounds on Capitol Hill in support of the President’s preferred spending priorities. The current steady pace of congressional hearings might suggest that Congress is methodically working its way towards a timely passage of the defense budget. But this burst of activity on the defense committees simply belies the fact that there remain deeply entrenched and persistent difficulties in trying to bridge fundamental party disagreements about the size and structure of the defense budget. In addition, it still bears reminding that the looming political constraints of the midterm elections will only further exacerbate and protract this year’s defense spending negotiations.  Our challenges in funding defense include issues that are both common as well as specific to our current moment: a discussion over total spending, what key committee members and party factions think about total spending right now, the relevance of the NDAA authorizing legislation, the challenges of frequent CRs, and the impact of issues of the day on spending.

The Wider Context of Total Defense Spending:

How much the US spends on defense is a perennial question for governance, with a number of important metrics and considerations.  As a percentage of GDP, defense spending has varied over time: currently just over 3%, it has been as high as over 8% during the 1960s and has waxed and waned with different administrations and global political contexts (going down after the end of the Cold War, for example).  Compared to other spending, it’s noted as a percentage of world military spending (over a third), relative to the next military power, China (three times as much), relative to the total cost of the nations that spend the most after the US (more than the next eleven combined), relative to other diplomatic or social or R&D spending in the US (dwarfs diplomatic spending, Social Security/Medicare/Medicaid/SCHIP are several times costlier than defense, and it depends).  Proponents of raising or cutting defense spending have predictable metrics that they prefer.  In the recent past we’ve been fighting over around $750 billion for defense.

Thoughtful commentators have analyzed component pieces of military spending for guiding our discussion of pressing needs (eg: R&D especially in an era of strategic competition), and what streamlining is possible (eg: legacy systems, and a system with a heavy reliance on contractors get attention).  Even serious attempts to reduce costs can be elusive, as Afghanistan has shown: we gained much heartbreak but no peace dividend.  It is both true that many significant areas for cost-saving reforms exist, but also that the challenges we face are great.

Key Players and Partisan Positions

Some of the political spending disagreements were already on public display even before the official reveal of the budget. Five days before the Pentagon released the Administration’s FY23 defense budget request, a group of 40 Republicans from both the House and Senate Armed Services committees strongly urged the President to increase defense spending by at least 5% above the current rate of inflation. It’s no surprise then that most of these Republican members found the $773 billion Pentagon proposal- approximately $30 billion over FY22 enacted appropriations– greatly inadequate and extremely disappointing.

For his part, the Democratic chair of the House Armed Services Committee (HASC), Rep. Adam Smith, has resisted reflexive defense budget increases in the past and has thoughtfully and consistently argued that what matters most is how the Defense Department actually allocates and spends resources rather than a specific topline figure. However, even Smith has submitted recently that in the current geopolitical context the FY23 defense budget would have to be bigger than originally envisioned. But how much bigger is the hard question that congressional authorizers and appropriators will have to wrestle with over the next couple of months.

Rep. Smith hasn’t offered his preferred topline yet but in a brief statement issued a day after the Administration put out its request, he seemed to imply that the proposed defense numbers are sensible and the $30 billion increase over FY22 appropriated levels is sufficient to meet the current challenges (notably even factoring in high inflation). He’ll probably stick with the $773 billion topline request and push against any increases. However, it is not clear whether he’ll be able to hold the line against even some of his own Democratic colleagues on the committee who might be willing to get behind Republican offers of a higher topline because of electoral pressures. The more interesting question here is what increase would be acceptable and reasonable to the Democrats. Or whether Republicans – sensing major victories in the midterm  elections – will push for unacceptably high numbers knowing full well they can start the new Congress in January with a clean slate and their preferred defense topline.

The Importance and Limitations of the NDAA

It’s not yet clear how Rep. Adam Smith’s counterpart in the Senate will approach the topline figure debate but if last year’s negotiations over the National Defense Authorization Act (NDAA) are any indication, the final authorized topline could well be higher than the budget request. The problem is that the final version of the FY22 NDAA did not pass both chambers in Congress until mid-December- almost three months into a new fiscal year. Granted, last year’s budget submission came quite late, impacting the NDAA markup timeline and its final floor passage. But this year won’t be much better, if only because of the compressed congressional schedule due to the midterm elections.

Of course, the other big issue is that authorization is not an appropriation. And even if there is momentum in Congress to pass a timely NDAA with a higher topline, the more intractable hurdle will be getting a consensus for a broader spending deal which will actually determine the Pentagon’s final numbers. As has been often the case with prior congressional negotiations during the annual appropriations process, the thorniest impediment to reaching a final deal has almost always come down to dollar allocations between defense and nondefense domestic accounts. Congress needed 4 continuing resolutions to tide them over during negotiations for FY22 appropriations. How many stopgap measures will be necessary then to reconcile Democratic and Republican differences during this election year?

The Frequent Challenge of Continuing Resolutions (CRs)

Unfortunately, even the most charitable reading of the prevailing circumstances suggests that the Defense Department will start FY23 with yet another continuing resolution. This would be a particularly unwelcome development considering the continued inflationary pressures which are playing out against the backdrop of an extremely challenging threat environment. For senior Pentagon leaders, who only recently got a reprieve from a series of continuing resolutions that locked in lower defense spending for about 6 months of the current fiscal year, this is certainly a disheartening prospect.

New Challenges Change Congressional Negotiations: Ukraine and More

One factor that might actually have a role in determining how much Congress appropriates for the Department of the Defense is the cost of the emergency supplementals for the war in Ukraine. In a strange way this additional spending could potentially facilitate negotiations and serve as a sort of pressure relief valve. Congress has already approved a $14 billion aid package as part of the FY22 omnibus deal, which saw $3.5 billion earmarked for the Pentagon. And the Biden Administration just recently submitted a new request for almost $33 billion which will provide an additional $16.5 billion infusion of funds. There will certainly be other requests later this year.

It’s possible that this extra defense spending can allow congressional negotiators the space to reach an FY23 appropriations compromise in a timelier manner. Let’s hope so!

Katina Slavkova is a Fellow and Director of the Certificate Program at the Government Affairs Institute

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