Statement of J. Michael Gilmore, Assistant Director, Congressional Budget Office on:
The 2009 Future Years Defense Program: Implications and Alternatives
Before the Committee on the Budget, U.S. House of Representatives
February 4, 2009
Mr. Chairman, Congressman Ryan, and Members of the Committee, I appreciate the opportunity to appear before you today to discuss the long-term implications of the Department of Defense’s (DoD’s) plans.
My testimony describes the Congressional Budget Office’s (CBO’s) most recent projections (in this case, through 2026) for the implications of the 2009 Future Years Defense Program (FYDP), which specifically addresses fiscal years 2009 through 2013.
The 2009 FYDP, transmitted in April 2008, reflects changes to the department’s programs and priorities since February 2007. The 2009 FYDP and CBO’s projections of its long-term implications exclude potential future supplemental or emergency appropriations; CBO’s projections include additional appropriations that have already been enacted. CBO’s projections exclude program changes announced by the Bush Administration after it released the 2009 FYDP and any changes proposed by the Obama Administration so far.
Overall, the budgetary implications of DoD’s current plans are similar to those described in CBO’s previous projections: Carrying out plans proposed in the FYDP would require sustaining annual defense funding over the long term at higher real (inflation-adjusted) levels than those that occurred at the peak of the buildup in the mid-1980s.
Four factors in particular account for the projected high level of defense spending under the FYDP:
-- Plans to purchase more new military equipment over the next several years and then to sustain that rate of procurement over the longer term;
-- Plans, as part of military transformation, to develop and eventually produce weapon systems that provide new capabilities—systems whose estimated costs are also increasing;
-- Plans to increase the size of military forces and the growing costs of pay and benefits for DoD’s military and civilian personnel; and
-- Plans to meet the rising costs of operation and maintenance (O&M) for aging equipment as well as for newer, more complex equipment.
In CBO’s projection, defense resources average about $549 billion annually (in constant 2009 dollars) from 2014 to 2026, or about 6 percent more than the $517 billion in total obligational authority (TOA) requested by the Bush Administration and the $515 billion in TOA provided by the Congress for 2009.
Consideration of potential unbudgeted costs has the effect of increasing the projection of long-term demand for defense funding to an annual average of about $652 billion through 2026, or 26 percent more than the funding provided for 2009 (Emphasis added—Ed.) (and the Bush Administration’s 2009 request).
CBO’s analysis of unbudgeted costs included several possibilities:
-- that the costs of weapon systems now under development would exceed early estimates, as they have in the past;
-- that medical costs might rise more rapidly than DoD has assumed; and
-- that DoD would continue to conduct military operations overseas as part of the war on terrorism (also called contingency operations), albeit at reduced levels relative to current operations in Iraq and Afghanistan.
Costs for operations in Iraq, Afghanistan, and for other purposes related to the war on terrorism have been rising.
In 2007, appropriations for those activities totaled $170 billion in 2007 dollars ($176 billion in constant 2009 dollars), or 28 percent of total funding for the Department of Defense.
In 2008, the appropriations rose to $187 billion in 2008 dollars ($190 billion in constant 2009 dollars), or 28 percent of defense funding that year. (In both years, some of the supplemental and emergency funding was for purposes unrelated to military operations overseas: in 2007, $5 billion; in 2008, $7 billion.)
Under DoD’s current plans and CBO’s projections of them, defense resources would steadily decline in relation to the size of the economy. The share of the U.S. gross domestic product (GDP) allocated to defense spending declined from an annual average of 5.6 percent in the 1980s to 3.8 percent in the 1990s.
If DoD’s current plans were carried out, defense spending would drop to 3.1 percent of GDP by 2013 and to 2.5 percent of GDP by 2026, excluding unbudgeted costs. (end of excerpt)
Click here for the full statement (28 pages in PDF format) on the CBO website.