The Pentagon’s spending plans are relatively flat adjusted for inflation for remainder of its five-year budget program that begins in fiscal year 2021 but in the decade leading to 2025 the budget will have to grow faster than inflation to keep up with current plans, the Congressional Budget Office (CBO) estimates in a new report.
Between fiscal years 2022 and 2025, the Defense Department projects requesting about $707 billion annually, adjusted for inflation, which is the last four years of its Future Years Defense Program (FYDP), but those costs will rise to $781 billion in FY ’21 dollars by 2035, a 10 percent increase in real terms in the decade beyond the FYDP, CBP projects.
The legislative budget and economic data agency cites three reasons for the projected need for increased spending in real terms during the 10-year period: military personnel compensation, funding for operations and maintenance (O&M), and acquisition programs “to meet the department’s modernization objectives and maintain the current size of the force.”
Spending on O&M over the projected period analyzed by CBO would account for 50 percent of DoD’s additional budget needs, acquisition costs about 30 percent and military personnel costs 20 percent.
Acquisition spending, which includes procurement and research and development, will go from $242 million in FY ’25 to $268 billion in FY ’28 and then fluctuate a bit and average $265 billion annually during the seven years between FY ’29 and FY ’35, CBO projects.
The Navy’s acquisition costs are estimated to grow from $80 billion in FY ’25 to $87 billion the following year and reach $93 billion in FY ’28, and then range between $87 billion and $93 billion out to FY ’35. Air Force acquisition costs are projected to go from $66 billion in FY ’25 to $72 billion two years later and then remain steady at around $71 billion on average through FY ’35. Army acquisition costs are seeing growing from $35 billion in FY ’25 to $41 billion in FY ’21 and then average $40 billion a year thereafter.
Spending on missile defense and other defense-wide acquisition is expected to hold steady between $31 billion and $32 billion between FY ’25 and FY ’35.
CBO points out that the less than 1 percent in average annual growth in the DoD budget between FY ’21 and FY ’35 is still below the 3 to 5 percent annual growth the department says it needs to fund the Trump administration’s defense strategy.
CBO cautions that its projections are estimates and not predictions and assume DoD’s plans underpinning the its FYDP won’t change.
“Uncertainty about the 2021 FYDP is heightened because DoD is in the early stages of shifting its emphasis from counterinsurgency operations to more technologically advanced warfare,” CBO says.