Today, CBO released an analysis of the long-term implications of the Department of Defense’s (DoD’s) five-year budget plans. CBO projects that the costs of those plans would exceed the funding limits established by the Budget Control Act of 2011 (BCA) by an average of about $60 billion to about $90 billion a year between fiscal years 2014 and 2021, depending on the cost assumptions used in the projection.
CBO analyzed DoD’s Future Years Defense Program (FYDP), a detailed statement of DoD’s plans and the estimated costs of those plans that the department submits along with its annual budget request. The latest FYDP, issued in April 2013, spans the years 2014 through 2018. Because decisions made in the near term can have consequences for the defense budget well beyond that period, CBO—at the request of the Chairman and Ranking Member of the Senate Budget Committee—examined the FYDP and projected its budgetary impact through 2028. The FYDP describes DoD’s plans for its normal (“base budget”) activities, such as the development and procurement of new weapon systems and the day-to-day operations of the military and civilian workforce. It leaves aside the war in Afghanistan and other nonroutine military activities that are funded separately.
CBO produced two projections of the costs of DoD’s plans. The first, the “CBO projection,” used CBO’s estimates of the costs of military activities and the extent to which those costs will change over time; those estimates reflect DoD’s experience in recent years. The second projection, the “extension of the FYDP,” started with DoD’s estimates of the costs of its plans through 2018 and extended them beyond 2018 using DoD’s cost estimates if they were available and CBO’s projections of price and compensation trends for the overall economy if DoD’s estimates were not available.
According to the CBO projection:
Under either projection, the costs of DoD’s plans would significantly exceed the limits set by the automatic enforcement procedures under the Budget Control Act, which constrains discretionary appropriations through 2021. Specifically, if DoD continues to receive its historical share of the national defense budget (95.5 percent over the past decade), CBO’s analysis yields these conclusions:
A future post will examine different approaches that DoD could use to address the growing gap between the projected cost of its plans and the funding permitted under the BCA.
David Arthur and Daniel Frisk are analysts in CBO’s National Security Division. Many other analysts from that division and from CBO’s Budget Analysis Division contributed to the study.