Long-Term Implications of the 2023 Future Years Defense Program
CBO analyzes the Department of Defense’s (DoD’s) plans for 2023 through 2027 as presented in the 2023 Future Years Defense Program and projects that DoD’s costs would increase by 9 percent from 2027 to 2037 without the effects of inflation.
As part of the President’s annual budget request, the Department of Defense (DoD) develops a plan—called the Future Years Defense Program (FYDP)—that reflects DoD’s expectations about its programs and costs over the next five years. In this report, the Congressional Budget Office analyzes DoD’s plans for 2023 through 2027 (as presented in the 2023 FYDP, which was issued in April 2022) and projects how those plans would affect defense costs for an additional 10 years (through 2037).
In his proposed budget, the President requested $772 billion for DoD in fiscal year 2023. That amount is about 1.5 percent less (after removing the effects of inflation) than the amount appropriated for 2022.
According to estimates provided in the 2023 FYDP, DoD’s budget in 2024 would increase by 1.5 percent, to $784 billion, and then slowly decrease to $762 billion in 2027. (All dollar amounts in this report are expressed in 2023 dollars.) The portions of the budget allocated for day-to-day operations, acquisition of new weapons, and upkeep of infrastructure would remain nearly unchanged through 2027.
In the 10 years beyond the FYDP period, the inflation-adjusted cost of DoD’s plans would increase by 9 percent, to $830 billion in 2037, CBO projects on the basis of DoD’s cost estimates through 2027. Nearly 80 percent of that increase would be for costs of operation and maintenance and military personnel. CBO’s projections for those later years are based as much as possible on policies underlying DoD’s estimates of costs in the 2023 FYDP, current laws regarding the compensation of military personnel, and the longer-term acquisition plans that DoD publishes in its official documents.
Costs would be higher if CBO’s projections were based on DoD’s historical cost growth and current expectations about cost growth in the economy as a whole. In that case, the cumulative cost of implementing DoD’s plans would be about 5 percent higher over the FYDP period than DoD estimates and about 8 percent higher over the full 15-year period (2023 to 2037) than CBO projects on the basis of DoD’s estimates for the FYDP period. In addition, the higher amount that the Congress appropriated for 2023 ($44 billion, or 6 percent, more than the Administration’s request) may provide a basis for more costly FYDPs in the future.