The Obama Administration today unveiled its defense budget request for FY 2012, which totals $553 billion in discretionary funding for the peacetime costs of the Department of Defense (DoD) and $5 billion in mandatory funding. In addition to the “base” budget, the administration also requests $118 billion for Overseas Contingency Operations (OCO) and $27 billion for national defense activities in the Department of Energy and other agencies. Altogether, the total national defense budget request is $703 billion for FY 2012.
"Nobody does defense policy better than CSBA. Their work on strategic and budgetary topics manages to combine first-rate quality and in-depth research with timeliness and accessibility—which is why so many professionals consider their products indispensable." – Gideon Rose, Editor, Foreign Affairs.
This backgrounder addresses the current state of the FY 2011 defense budget, identifies insights stemming from Secretary Gates’ announcement on the FY 2012 budget, and raises budgetary and programmatic issues likely to complicate DoD’s planning over the Future Year Defense Program (FYDP).
With a federal budget deficit that exceeded $1.3 trillion in FY 2010 and a rapidly mounting national debt, the findings of the Fiscal Commission established to identify ways to balance the budget have been much anticipated. Tackling the deficit is important to restoring the government’s fiscal health and the nation’s economic prosperity. It is also important to national security. History has demonstrated that in times of major conflict, the fiscal might of the United States and the ability to mobilize resources on a massive level have been a source of enduring strategic advantage. But with the deficit near record levels, the debt load rising, and interest payments on the debt consuming a greater share of the budget each year, this advantage is rapidly eroding.
The United States is struggling to emerge from the greatest peacetime economic downturn since the Great Depression. Known as the Great Recession, the country’s current fiscal difficulties seem unlikely to abate any time soon. If there is a consensus regarding the country’s recovery, it is that it will be both gradual and protracted.1 Some economists, eyeing the government’s rapidly growing debt and expanding obligations, have expressed concerns over the country’s ability to sustain healthy growth levels over the longer term. The implications for US security are potentially profound. Washington has long relied on its ability to bring to bear far greater resources than any other country against any threat to the nation’s security. If current trends play out, this advantage is almost certain to diminish, perhaps dramatically, in the coming years. Long accustomed to pursuing a “rich man’s” approach to strategy, the United States will find itself increasingly challenged to take a “smart man’s” approach—one for which it seems ill-prepared.
As the economy begins to emerge from the deepest recession since the Great Depression, the federal government faces a dire fiscal situation. In fiscal year (FY) 2009, the budget deficit rose to a record high of $1.4 trillion, and it is forecasted to reach as high as $1.6 trillion in FY 2010. These record deficits are due in no small part to increased spending on fiscal stimulus programs and a sharp reduction in tax revenues due to the recession. But underlying the current fiscal situation is a structural deficit that the economic downturn has only exacerbated. A telling indicator of this is that one of the fastest growing items in the budget is net interest on the national debt. According to OMB projections, in FY 2018 the federal government will begin spending more on net interest payments than on national defense for the first time in modern history.
On April 6, the Department of Defense released its Nuclear Posture Review (NPR), which sets forth the Obama Administration’s guidance on American nuclear policy, force structure, and doctrine. The report has been highly anticipated, due in large part to President Obama’s public commitment to the goal of a nuclear weapons-free world.