By Ann Roosevelt
The Aerospace Industry Association (AIA)’s newest report finds a defense budget squeeze coming that will affect the next administration and wants presidential candidates to address the specifics of how they’ll manage budget pressures and make future defense investments to keep the U.S. military on the cutting edge.
“It is an absolutely critical debate to have among those who do aspire to become commander in chief because there are some very hard questions,” Marion Blakey, AIA president and CEO, said April 15. AIA does not endorse candidates and does not have a Political Action Committee.
“All of the candidates have spoken to parts of these issues,” Jeremiah Gertler, AIA assistant vice president, defense policy, said.”What we’re saying with this report is that the next administration is going to have to figure a way out of that, no matter who it is, no matter how strong the defense top line happens to be. It’s going to be a problem for the next president.”
On tax day–the day the government officially collects the funds for defense and other government spending–AIA issued a report and recommendations, “U.S. Defense Modernization, Readiness Now and for the Future.”
AIA offers five recommendations to modernize so the U.S. military stays on the technological cutting edge: to sustain a national consensus to adequately fund a full spectrum defense capability and readiness; to acknowledge that defense modernization is overdue and increase annual procurement funding to a steady state range of $120 billion to $150 billion in constant dollars; establish a defense spending floor at 4 percent of GDP; address the bow wave of modernization requirements by providing growth and stability in aerospace procurement and research accounts; and to foster innovation and stability in defense budget planning by establishing a Stable Program Funding Account–similar to that proposed by the Defense Acquisition Performance Assessment panel.
The report finds three trends will drain flexibility and squeeze decision makers as they respond to deferred modernization and recapitalization needs: the growth in operations and maintenance costs; rising personnel expenditures exacerbated by future costs of recent increases in active duty end-strength; and the simultaneous need for reset and recapitalization.
“These three developments, working in combination are going to require that the next U.S. administration carefully consider how it’s going to balance the financial resources that we have across all national defense capabilities,” Blakey said.
Over the past 45 years investment spending has shown a cyclical pattern, she said.
Twice during that period, investment in new platforms has dipped significantly: after Vietnam and at the end of the Cold War. “Despite these recent increases, based budget procurement is still running well below historic averages,” she said.
Gertler said, “Modernization accounts have been increasing and we’ve seen that in recent years, but procurement is still only about 20 percent of the budget and it’s below the level that authoritative sources indicate is required to keep current, much less to get ahead.”
The real world consequence of the squeeze can be seen, for example, in what Air Force Secretary Mike Wynne has said–he’s getting 60 airplanes per year, and has about 6,000 aircraft all told, which means his recapitalization rate is 100 years, Gertler said. It will take longer, because in the FY ’09 budget Wynne is not getting 60 airplanes. He’s getting a lot of unmanned aerial vehicles, but is not able to maintain the 100 year number in terms of getting a new Air Force.
As well, officials said Congressional Budget Office analysis says for steady procurement funding $120 billion to $150 billion per year in constant dollars is required to modernize the current force.
By 2013, the operations and support elements of the budget will have more than doubled in the previous 25 years. That means tens of billions of dollars are migrating from the investment portfolio to operations and support costs, making it even harder for defense planners to manage for the future.
This summer, AIA will issue a follow-on report looking at specific capabilities such as tactical aircraft, space systems and logistics, Blakey said.
AIA has been in touch with all the campaigns and plans to do more specific outreach in the future.