Congressional Budget Office

Prospects For DoD's Budget Over
The Next Decade
Presentation to TechAmerica Procurement Polic...
Outline

• Fiscal Situation
• Implications of Budget Control Act
• Internal Pressures on DoD's Budget

• Approaches for Sc...
Deficits or Surpluses Under CBO's Baseline
for FY 2014
Percentage of GDP

CBO's Baseline
Projection

Source: Congressional...
Outline

• Fiscal Situation
• Implications of Budget Control Act
• Internal Pressures on DoD's Budget

• Approaches for Sc...
Projected Costs of DoD’s FY 2014 Plans Compared
with Funding Caps
Billions of FY 2014 dollars

Source: Congressional Budge...
Outline

• Fiscal Situation
• Implications of Budget Control Act
• Internal Pressures on DoD's Budget

• Approaches for Sc...
CBO's Projection of FY 2014 Defense Budget
Request by Appropriation Title
Billions of FY 2014 dollars

Source: Congression...
Each of the Three Major Categories of the Defense Budget
Has Its Own Momentum
■ Costs of developing and buying weapons hav...
Example of Cost Growth in Acquisition Programs:
The Navy’s Shipbuilding Program

Source: Congressional Budget Office, An A...
Example #2:
Growth in O&M per Active-Duty Service Member

Source: Congressional Budget Office, Long-Term Implications of t...
Growth in Pay and Benefits of Military Personnel:
The Military Medical System
Billions of FY 2014 dollars

Source: Congres...
Outline

• Fiscal Situation
• Implications of Budget Control Act
• Internal Pressures on DoD's Budget

• Approaches for Sc...
CBO Examined Four Approaches to
Scaling Back DoD’s Plans ($90 billion/year gap)
Sources of Reductions (Billions of 2013 do...
Illustrative Force Structure Reductions for
Selected Unit Types Under CBO Options
Active and Reserve Units under DoD’s Pla...
Bibliography of Related CBO Studies
■ Costs of Military Pay and Benefits in the Defense Budget
(November 2012)
■ Approache...
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Prospects For DoD's Budget Over The Next Decade

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Presentation by David E. Mosher, CBO’s Assistant Director for National Security, to the TechAmerica Procurement Policy Meeting

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Prospects For DoD's Budget Over The Next Decade

  1. 1. Congressional Budget Office Prospects For DoD's Budget Over The Next Decade Presentation to TechAmerica Procurement Policy Meeting January 24, 2014 David E. Mosher Assistant Director of CBO for National Security
  2. 2. Outline • Fiscal Situation • Implications of Budget Control Act • Internal Pressures on DoD's Budget • Approaches for Scaling Back DoD’s Plans CONGRESSIONAL BUDGET OFFICE 1
  3. 3. Deficits or Surpluses Under CBO's Baseline for FY 2014 Percentage of GDP CBO's Baseline Projection Source: Congressional Budget Office, Options for Reducing the Deficit: 2014-2023, November 2013. An updated version of this figure appears in Congressional Budget Office, The Budget and Economic Outlook: 2014 to 2024, February 2014. CONGRESSIONAL BUDGET OFFICE 2
  4. 4. Outline • Fiscal Situation • Implications of Budget Control Act • Internal Pressures on DoD's Budget • Approaches for Scaling Back DoD’s Plans CONGRESSIONAL BUDGET OFFICE 3
  5. 5. Projected Costs of DoD’s FY 2014 Plans Compared with Funding Caps Billions of FY 2014 dollars Source: Congressional Budget Office, Long-Term Implications of the 2014 Future Years Defense Program, November 2013 The gap between DoD’s FYDP plans and the BCA caps averages about $60 billion to $90 billion a year CONGRESSIONAL BUDGET OFFICE 4
  6. 6. Outline • Fiscal Situation • Implications of Budget Control Act • Internal Pressures on DoD's Budget • Approaches for Scaling Back DoD’s Plans CONGRESSIONAL BUDGET OFFICE 5
  7. 7. CBO's Projection of FY 2014 Defense Budget Request by Appropriation Title Billions of FY 2014 dollars Source: Congressional Budget Office, Long-Term Implications of the 2014 Future Years Defense Program, November 2013 CONGRESSIONAL BUDGET OFFICE 6
  8. 8. Each of the Three Major Categories of the Defense Budget Has Its Own Momentum ■ Costs of developing and buying weapons have been, on average, 20 percent to 30 percent higher than DoD’s initial estimates ■ Costs of operation and maintenance per active-duty service member have been steadily increasing since at least 1980, excluding the cost of the wars in Iraq and Afghanistan ■ Costs for compensation of military personnel – including health care benefits for service members and retirees– have been rapidly increasing since 2000 The mismatch between DoD’s plans and the BCA caps is accentuated by these internal pressures in DoD’s budget CONGRESSIONAL BUDGET OFFICE 7
  9. 9. Example of Cost Growth in Acquisition Programs: The Navy’s Shipbuilding Program Source: Congressional Budget Office, An Analysis of the Navy’s Fiscal Year 2014 Shipbuilding Plan, October 2013 CONGRESSIONAL BUDGET OFFICE 8
  10. 10. Example #2: Growth in O&M per Active-Duty Service Member Source: Congressional Budget Office, Long-Term Implications of the 2014 Future Years Defense Program, November 2013 CONGRESSIONAL BUDGET OFFICE 9
  11. 11. Growth in Pay and Benefits of Military Personnel: The Military Medical System Billions of FY 2014 dollars Source: Congressional Budget Office, Long-Term Implications of the 2014 Future Years Defense Program, November 2013 CONGRESSIONAL BUDGET OFFICE 10
  12. 12. Outline • Fiscal Situation • Implications of Budget Control Act • Internal Pressures on DoD's Budget • Approaches for Scaling Back DoD’s Plans CONGRESSIONAL BUDGET OFFICE 11
  13. 13. CBO Examined Four Approaches to Scaling Back DoD’s Plans ($90 billion/year gap) Sources of Reductions (Billions of 2013 dollars) Option 1: Preserve Force Structure; Cut Acquisition and Operations 140 Option 2: Cut Acquisition and Operations; Phase in Reductions in Force Structure 140 120 120 100 100 80 80 60 60 40 40 20 20 0 0 140 Option 3: Achieve Savings Primarily by Cutting Force Structure Option 4: Reduce Force Structure Under a Modified Set of Budget Caps 140 120 120 Reductions Required Under Existing Caps 100 80 100 80 60 60 40 40 20 20 0 0 2013 2014 2015 2016 2017 2018 2019 2020 2021 Reduction from Cuts to Operations 2013 2014 2015 2016 2017 2018 2019 2020 2021 Reduction from Cuts to Acquisition Reduction from Cuts to Force Structure Source: Congressional Budget Office, Approaches for Scaling Back the Defense Department’s Budget Plans, March 2013 CONGRESSIONAL BUDGET OFFICE 12
  14. 14. Illustrative Force Structure Reductions for Selected Unit Types Under CBO Options Active and Reserve Units under DoD’s Plans for 2017 BCTs Planned force, 2017 Carriers 66 11 Amphibious Marine Ships Regiments 33 Fighter Sqdns** Airlift Sqdns** 93 20 11 Cuts Under the Options by 2021 (CBO’s Cost Projection*) Option 2 7 1 4 2 11 3 Option 3 16 3 8 3 22 5 Illustration assumes that reductions are spread evenly across all four services. * Reductions are about one-third smaller under DoD’s costing assumptions. ** Air Force squadrons (sqdns) are notional units consisting of 12 aircraft. Source: Congressional Budget Office, Approaches for Scaling Back the Defense Department’s Budget Plans, March 2013 CONGRESSIONAL BUDGET OFFICE 13
  15. 15. Bibliography of Related CBO Studies ■ Costs of Military Pay and Benefits in the Defense Budget (November 2012) ■ Approaches for Scaling Back the Defense Department’s Budget Plans (March 2013) ■ An Analysis of the Navy’s Fiscal Year 2014 Shipbuilding Plan (October 2013) – Latest of annual series ■ Long-Term Implications of the 2014 Future Years Defense Program (November 2013) – Latest of annual series ■ Approaches to Reducing Health Care Spending by the Department of Defense (January 2014) CONGRESSIONAL BUDGET OFFICE 14
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