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U.S. Defense Budget: Options and Choices for the Long Haul

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The Bush Administration has requested $611 billion for national defense in fiscal year 2009. This includes $541 billion for the “base” defense budget — $518 billion for the Department of Defense, and $23 billion for Department of Energy and other  defense related activities. The base defense budget is intended to cover the military’s longterm — essentially peace-time — force structure, readiness and modernization costs.

If approved, the 2009 request would bring the base defense budget to its highest level ever, in real (inflation-adjusted) terms.

In addition, the 2009 request includes $66 billion in emergency supplemental appropriations for defense, as a partial down-payment on 2009 war-related costs.Eventually, additional 2009 funding — of at least tens of billions of dollars — will have to be provided to cover war-related costs for the full year.

The 2008 defense budget is the highest defense budget, in real terms, since the end of World War II. Depending on how much funding is ultimately provided for military operations, it is possible that the defense budget for 2009 (i.e., including the base budget plus war-related funding) will end up being even higher.

Notwithstanding the recent buildup in defense spending, and the fact that, by  historical standards, defense spending now accounts for a relatively small share of the economy, there is good reason to question whether spending for defense will continue to grow over the next two decades. There is also good reason to question the affordability of the Department of Defense’s (DoD’s) current long-term defense plan.

If it is not affordable, DoD will have to consider, as it has in the past, a range of  options for eliminating this mismatch between likely future budget levels and the cost of implementing its existing long-term plans.

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