Long-Term Implications of the 2021 Future Years Defense Program
(Source: Congressional Budget Office; issued Sept. 09, 2020)
As part of the President’s 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 2021 through 2025 as presented in the 2021 FYDP and projects how those plans would affect defense costs through 2035.

-- In his proposed budget, the President requested a total of $706 billion for DoD in fiscal year 2021—4 percent less than was appropriated in 2020 after removing the effects of inflation. Of that total, $637 billion is designated for the base budget, which is intended to fund normal, peacetime activities. The remaining $69 billion is designated for emergency activities and overseas contingency operations (OCO)—that is, temporary, war-related activities, such as operations in Afghanistan and elsewhere.

-- About 70 percent of the OCO funding for 2021 is designated for base-budget and enduring activities (for example, regular maintenance activities that support overseas operations and are likely to continue regardless of the size of the forces deployed overseas). Designating appropriations in that way makes the request compliant with the funding caps set by the Bipartisan Budget Act of 2019 (Public Law 116-37). For 2022 through 2025, when those caps will no longer be in effect, DoD plans to request funding for those activities in the base budget.

-- According to estimates provided in the 2021 FYDP, total funding would be relatively flat through 2025, averaging about $707 billion per year in 2021 dollars. The relative amounts allocated for day-to-day operations, the acquisition (including development and procurement) of new weapons, and upkeep of infrastructure would also remain nearly unchanged over the FYDP period.

-- On the basis of DoD’s cost estimates, CBO projects that the inflation-adjusted cost of DoD’s plans would increase by 10 percent in the 10 years beyond the FYDP period, to $781 billion in 2035. Nearly 70 percent of that increase would be for operation and maintenance and for military personnel.

-- Using costs that reflect historical experience, CBO projects that the cost of implementing DoD’s plans could be about 2 percent higher than DoD estimates over the FYDP period and about 3 percent higher than CBO projected using DoD’s estimates over the full 15-year period, 2021 to 2035.

Click here for the full report (23 PDF pages), on the CBO website.


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