Congressional Budget Office Prospects For DoD's Budget Over The Next Decade Presentation to TechAmerica Procurement Policy Meeting January 24, 2014 David E. Mosher Assistant Director of CBO for National Security
Outline • Fiscal Situation • Implications of Budget Control Act • Internal Pressures on DoD's Budget • Approaches for Scaling Back DoD’s Plans 1 C O N G R E S S I O N A L B U D G E T O F F I C E
Deficits or Surpluses Under CBO's Baseline for FY 2014 Percentage of GDP CBO's Baseline Projection Source: Congressional Budget Office, Options for Reducing the Deficit : 2014-2023, November 2013. An updated version of this figure appears in Congressional Budget Office, The Budget and Economic Outlook: 2014 to 2024 , February 2014. 2 C O N G R E S S I O N A L B U D G E T O F F I C E
Outline • Fiscal Situation • Implications of Budget Control Act • Internal Pressures on DoD's Budget • Approaches for Scaling Back DoD’s Plans 3 C O N G R E S S I O N A L B U D G E T O F F I C E
Projected Costs of DoD’s FY 2014 Plans Compared with Funding Caps Billions of FY 2014 dollars Source: Congressional Budget Office, Long-Term Implications of the 2014 Future Years Defense Program , November 2013 The gap between DoD’s FYDP plans and the BCA caps averages about $60 billion to $90 billion a year 4 C O N G R E S S I O N A L B U D G E T O F F I C E
Outline • Fiscal Situation • Implications of Budget Control Act • Internal Pressures on DoD's Budget • Approaches for Scaling Back DoD’s Plans 5 C O N G R E S S I O N A L B U D G E T O F F I C E
CBO's Projection of FY 2014 Defense Budget Request by Appropriation Title Billions of FY 2014 dollars Source: Congressional Budget Office, Long-Term Implications of the 2014 Future Years Defense Program , November 2013 6 C O N G R E S S I O N A L B U D G E T O F F I C E
Each of the Three Major Categories of the Defense Budget Has Its Own Momentum ■ Costs of developing and buying weapons have been, on average, 20 percent to 30 percent higher than DoD’s initial estimates ■ Costs of operation and maintenance per active-duty service member have been steadily increasing since at least 1980, excluding the cost of the wars in Iraq and Afghanistan ■ Costs for compensation of military personnel – including health care benefits for service members and retirees – have been rapidly increasing since 2000 The mismatch between DoD’s plans and the BCA caps is accentuated by these internal pressures in DoD’s budget 7 C O N G R E S S I O N A L B U D G E T O F F I C E
Example of Cost Growth in Acquisition Programs: The Navy’s Shipbuilding Program Source: Congressional Budget Office, An Analysis of the Navy’s Fiscal Year 2014 Shipbuilding Plan , October 2013 8 C O N G R E S S I O N A L B U D G E T O F F I C E
Example #2: Growth in O&M per Active-Duty Service Member Source: Congressional Budget Office, Long-Term Implications of the 2014 Future Years Defense Program , November 2013 9 C O N G R E S S I O N A L B U D G E T O F F I C E
Growth in Pay and Benefits of Military Personnel: The Military Medical System Billions of FY 2014 dollars Source: Congressional Budget Office, Long-Term Implications of the 2014 Future Years Defense Program , November 2013 10 C O N G R E S S I O N A L B U D G E T O F F I C E
Outline • Fiscal Situation • Implications of Budget Control Act • Internal Pressures on DoD's Budget • Approaches for Scaling Back DoD’s Plans 11 C O N G R E S S I O N A L B U D G E T O F F I C E
CBO Examined Four Approaches to Scaling Back DoD’s Plans ($90 billion/year gap) Sources of Reductions (Billions of 2013 dollars) Option 1: Option 2: Preserve Force Structure; Cut Acquisition and Operations Cut Acquisition and Operations; Phase in Reductions in Force Structure 140 140 120 120 100 100 80 80 60 60 40 40 20 20 0 0 Option 3: Option 4: Achieve Savings Primarily by Cutting Force Structure Reduce Force Structure Under a Modified Set of Budget Caps 140 140 140 120 120 120 Reductions 100 100 100 Required Under Existing Caps 80 80 80 60 60 60 40 40 40 20 20 20 0 0 0 2013 2014 2015 2016 2017 2018 2019 2020 2021 2013 2014 2015 2016 2017 2018 2019 2020 2021 Reduction from Cuts to Operations Reduction from Cuts to Acquisition Reduction from Cuts to Force Structure Source: Congressional Budget Office, Approaches for Scaling Back the Defense Department’s Budget Plans , March 2013 12 C O N G R E S S I O N A L B U D G E T O F F I C E
Illustrative Force Structure Reductions for Selected Unit Types Under CBO Options Active and Reserve Units under DoD’s Plans for 2017 Amphibious Marine Fighter Airlift BCTs Carriers Ships Regiments Sqdns** Sqdns** Planned force, 66 11 33 11 93 20 2017 Cuts Under the Options by 2021 (CBO’s Cost Projection*) Option 2 7 1 4 2 11 3 Option 3 16 3 8 3 22 5 Illustration assumes that reductions are spread evenly across all four services. * Reductions are about one-third smaller under DoD’s costing assumptions. ** Air Force squadrons (sqdns) are notional units consisting of 12 aircraft. Source: Congressional Budget Office, Approaches for Scaling Back the Defense Department’s Budget Plans , March 2013 13 C O N G R E S S I O N A L B U D G E T O F F I C E
Bibliography of Related CBO Studies ■ Costs of Military Pay and Benefits in the Defense Budget (November 2012) ■ Approaches for Scaling Back the Defense Department’s Budget Plans (March 2013) ■ An Analysis of the Navy’s Fiscal Year 2014 Shipbuilding Plan (October 2013) – Latest of annual series ■ Long-Term Implications of the 2014 Future Years Defense Program (November 2013) – Latest of annual series ■ Approaches to Reducing Health Care Spending by the Department of Defense (January 2014) 14 C O N G R E S S I O N A L B U D G E T O F F I C E
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