Center for Arms Control Analysis of Pentagon's FY2008 budget

February 5, 2007


"Top Line" Funding - The Bush Administration is requesting $484.1 billion for the Department of Defense in Fiscal Year 2008, which begins on October 1, 2007. This is $49 billion more than the current level of $432.4 billion, an increase of 11.3 percent, and inflation-adjust ("real") increase of 8.6 percent. This figure does not include funding for the nuclear weapons activities of the Department of Energy, which is considered part of total Defense Department spending. Nor does this figure include the costs of ongoing military operations in Iraq and Afghanistan.

The Office of Management and Budget estimates that total annual funding for the Defense Department alone will grow to $495 billion by Fiscal Year 2012, a figure which is undoubtedly low. Total Pentagon spending, not including funding for the Department of Energy or for actual combat operations for the period FY'08 through FY'12 will exceed $2.3 trillion.

Meanwhile, in January the Congressional Budget Office estimated that the deficit for FY'07 will be $172 billion. And while this is lower than the FY'06 deficit of $248 billion, it assumes that only $70 billion will be appropriated for military operations in Iraq and Afghanistan, and does not include the $93 billion in additional supplemental fundings requested today. Including those funds, the projected FY'07 deficit jumps to $265 billion.

Funding for Contingency Operations (Supplemental Appropriations) ­ In addition to its annual budget request, the Pentagon is also requesting $93.4 billion in supplemental funding for combat operations for Fiscal Year 2007, which is in addition to $70 billion in FY'07 supplemental funding approved by Congress as part of their regular 2007 budget work. In addition, the request includes $141.7 billion to cover Iraq and Afghanistan operations during FY'08. Congress has already approved over $500 billion in supplemental funding for operations in Iraq and Afghanistan.

Missile Defense ­ The Administration is requesting $8.9 billion for the Missile Defense Agency in FY'08, down roughly $0.5 billion from the current $9.4 billion. Missile defense continues to receive more funding than any other weapons program in the annual Pentagon budget. This total does not include $1.1 billion for the SBIRS-High satellite program.

Shipbuilding ­ The request includes funding for the continued development of the Aircraft Carrier Replacement Program and procurement of one vessel ($3.1 billion), the DDG-1000 [DD(x)] Destroyer Program ($3.5 billion), and the Littoral Combat Ship ($1.2 billion for three vessels). It includes $2.7 billion for the purchase of one SSN-774 "Virginia" class nuclear attack submarine.

Aircraft ­ The request includes $2.6 billion for 24 of the Navy's F/A-18E/F "Super Hornet," $2.6 billion for procurement of 26 V-22 "Osprey" tilt-rotor aircraft, $6.1 billion for 12 F-35 Joint Strike Fighters and $4.6 billion for 20 F-22A "Raptor" fighters.

Military Personnel ­ The request includes an increase in base pay of 3 percent. According to the Pentagon, base pay has risen 32 percent since 2001.

Army/Marine Corps End Strengths ­ Starting in FY'08 the active Army will grow by 7,000 annually through 2012, for a total increase of 65,000 troops, for a total end strength of 547,000. The active Marine Corps will grow by 5,000 annually through 2011, for a total increase of 27,000 and an end strength of 202,000. Combined, the Army and Marine Corps will grow by 92,000 by FY'12.

Homeland Defense ­ The request contains $17.5 billion for Pentagon activities related to homeland security including detection of and protection against weapons of mass destruction, emergency preparedness and response, and protecting critical infrastructure. The increase in DoD's FY'08 contribution over last year is 5.6 percent. NOTE: A footnote on the 2008 budget's Table "Homeland Security Funding By Agency" (Table S-5) indicates that DoD's contribution to homeland security has been revised upward significantly due to a change in methodology. Thus the 2007 budget shows a $16.4 billion DoD contribution to homeland security in FY'06, rather than the $9.5 billion shown in the 2006 request.

Cooperative Threat Reduction (CTR) -- The Administration is requesting $348.0 million for the CTR (also known as "Nunn-Lugar") program, 6.5 percent below the current level of $372.1 million and 15 percent below FY'06. Further, the request recommends a reduction (or rescission) of $1 million in current funding. The CTR program assists Russia and the former Soviet republics safeguard weapons of mass destruction and related technologies.

TOTAL REQUESTED FUNDING - Future Year's Defense Plan (FYDP) DoD Military (Function 050, including weapons activities of the Department of Energy and funding from other miscellaneous accounts.)

FY'07 $453.1 billion estimated FY'08 $502.2 billion requested FY'09 $476.6 billion projected FY'10 $490.4 billion projected FY'11 $504.4 billion projected FY'12 $518.4 billion projected Total, FY'08-'12 $2492.0 billion projected (Source: for "outyear" funding is the Office of Management and Budget's "Analytical Perspectives," Current Services Budget Authority by Function, Category and Program [Table 25-13].) NOTE: These figures are undoubtedly low. OMB's "051" estimate for FY'08, for example, is only $442.1 billion, compared to the Pentagon's actual request of $481.4 billion.

February 6 ANALYSIS: Beware of Misleading Defense Budget Arguments During the next few days as Pentagon officials brief their Fiscal Year 2008 budget request to Congress, the point will be made that defense spending as a percentage of Gross Domestic Product (GDP) is at historic lows." While this statement accurate, it is also misleading.

What these officials will not say is that in "real" (inflation adjusted) terms, the Fiscal Year 2008 defense budget request of $481.4 billion ­ which does not include an additional $141.7 billion to support military operations in Iraq and Afghanistan -- is more than 25 percent above the Cold War average and nearly equal to the high-water mark of the Reagan-era buildup. And this for a military one-third smaller than it was in 1990.

In fact, defense spending has been rising dramatically in recent years. Since the attacks of Sept. 11, 2001, annual defense spending, not including funding for Iraq and Afghanistan, has grown by $120 billion in real terms, an increase of 34 percent. That the Pentagon budget accounts for a smaller percentage of GDP is a result of the fact that the U.S. economy has been growing even faster ­ 44 percent over the same period.

Proponents of higher military spending are quick to seize on the "historically low percentage of GDP" rationale to justify higher budgets, but it's a specious argument. Determining appropriate levels of defense spending should be based on an assessment of threats to U.S. national security, not some artificial formula. For instance, funding for national defense during the last years of World War II was around 37 percent of GDP, or roughly $5 trillion in today's economy. That funding was based on legitimate war needs, and not economic performance.

Further, defense budgets as percentage of GDP say nothing about the burden that higher military spending puts on the American taxpayer. Higher Pentagon budgets, like increases in any other federal spending, mean cuts in other programs, higher taxes, or higher deficits. While the proposed $49 billion increase in this year's defense budget may not seem significant in a $14.5 trillion economy, it does require some critical choices within the federal budget.

Finally, under such a formula, what happens if GDP decreases? Would the military then support a parallel reduction in its budget? I think not.

Prepared by:

Christopher Hellman Military Policy Analyst Center for Arms Control and Non-Proliferation

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