Long-Term Implications of the Department of Defense's Fiscal Year 2010 Budget Submission

November 18, 2009

CBOs Acting Assistant Director in charge of the National Security Division, Matt Goldberg, testified today before the House Committee on Armed Services about the long-term implications of the fiscal year 2010 budget submission for the Department of Defense (DoD). Todays testimony is similar to CBOs testimony before the House Budget Committee last month. Decisions about national defense that are made todaywhether they involve weapon systems, military compensation, or numbers of personnelcan have long-lasting effects on the composition of the nations armed forces and the budgetary resources needed to support them.

In previous years, CBO used DoDs Future Years Defense Program (FYDP), which the department typically prepares each fiscal year and submits to the Congress as part of the Presidents budget request, as a key source of information for projecting defense spending. This year, however, the Administration did not submit a FYDP. CBOs projections for fiscal years 2011 through 2028 are based on the Presidents 2010 budget request; changes to defense plans announced in early April 2009 by Secretary of Defense Robert M. Gates; and other sources, including press releases and briefing materials.

Base Projections of Defense Spending

CBOs base projection of DoDs current plans averages about $567 billion annually (in constant 2010 dollars) from 2011 to 2028excluding overseas contingency operations (that is, overseas military operations against hostile forces, such as those in Iraq and Afghanistan). That amount is about 6 percent more than the $534 billion in total obligational authority requested by the Administration in its regular 2010 budget. Four main factors in particular account for the higher resources in the long term:

  • The likelihood of continued real growth in pay and benefits for DoDs military and civilian personnel;
  • Projected increases in the costs of operation and maintenance (O&M) for aging equipment as well as for newer, more complex equipment;
  • DoDs plans to develop and field advanced weapon systems to replace many of todays military systems that are nearing the end of their service lives; and
  • Investments in new capabilities, such as advanced intelligence, surveillance, and reconnaissance systems, to meet emerging security threats.

Rather than having funding provided through supplemental and emergency appropriations, the Administration has requested a full year of anticipated appropriations for overseas contingency operations along with its regular defense budget request for fiscal year 2010. The Administrations request of $130 billion would support 100,000 service members in Iraq and 68,000 in Afghanistan. CBO does not have access to DoDs estimates of costs for overseas contingency operations in 2011 or later that would have been contained in the 2010 FYDP.

Potential for Higher Costs

The long-term demand for defense resources could be larger than CBOs base projections. CBO has developed a scenario under which, consistent with the Status of Forces Agreement signed by the governments of Iraq and the United States in November 2008, all U.S. troops would be withdrawn from Iraq by December 31, 2011. Under that scenario, the total number of U.S. military personnel deployed worldwide would decline to 30,000 starting in fiscal year 2013, although those troops would be in unspecified locations and not necessarily in Iraq or Afghanistan. CBO estimates that supporting that number of deployed service members would require recurring annual appropriations of about $20 billion in 2010 dollars. CBO refers to those costs as contingency unbudgeted costs.

Other factors also could increase defense resources above CBOs base projections. There could be higher costs for developing and purchasing new weapon systems. In addition, as has been true historically, medical costs could rise more rapidly than DoD has assumed. Accounting for those and other factors, as well as contingency costs, CBO has projected the total unbudgeted costs of current defense plans. The inclusion of total unbudgeted costs increases the overall projection to an annual average of $624 billion through 2028, or 17 percent more than the regular funding requested for 2010. Some 38 percent of the total unbudgeted costs between 2013 and 2028 are associated with overseas contingency operations.