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The Truth About Pentagon Spending

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”Pentagon Pressed To Cut Its Budgets” — Los Angeles Times, December 20, 2004

”Pentagon Cost-Cutting Aimed At New Gear” — Washington Times, December 20, 2004

If these headlines are to be believed, readers might conclude that the Pentagon was considering cutting it’s spending, and that the era of higher defense budgets was over.

Wrong. The fact is, the $10 billion reduction in next year’s expected Defense Department budget request outlined in those articles isn’t a spending cut, it simply means the annual defense budget is growing more slowly than expected. Pentagon spending is at near-record heights, and continues to climb.

Consider the following:

  1. The expected Fiscal Year 2006 defense budget request, even if reduced by $10 billion, is still $12.5 billion above the level Congress approved for FY’05. In February 2004, as part of the budget FY’05 budget request, the Pentagon projected $443.1 billion in Budget Authority (BA) for 2006 for the Department of Defense and the nuclear weapons-related activities of the Department of Energy (the “050” budget). Congress authorized $420.6 billion for FY’05. That’s a projected increase of $22.5 billion. A $10 billion reduction still means a spending increase of $12.5 billion.
  2. Even the smaller $12.5 billion increase exceeds the rate of inflation. It’s unclear from media reports whether the projected smaller increase takes in to account the effects of inflation. Assuming it doesn’t, then the projected growth in the defense budget is a 3% increase. According to the Office of Management and Budget inflation in FY’05 is projected at two percent. This means that the revised smaller increase in Pentagon spending will still result in roughly $4 billion in new resources (“real” growth).
  3. The current $421 billion annual defense budget does not pay for Iraq and Afghanistan. Combat operations in Iraq and Afghanistan are funded outside the normal annual budget process, through special “supplemental” funding legislation. To date, Congress has provided the Pentagon nearly $170 billion for military operations in Iraq and Afghanistan [$14 billion in FY’02, $64 billion in FY’03, $65 billion in FY’04, and $25 billion “down-payment” for FY’05]. The Administration is expected to request an additional $80 billion or more for FY’05 early next year.
  4. Defense is growing this year, while other federal spending gets cut. According to the Senate Armed Services Committee, the FY’05 authorization of $420.6 billion is a 3.4% real increase over the previous year. Meanwhile, federal agencies funded under the Omnibus Appropriations Act had to absorb an across-the-board cut of 0.8%, and are likely facing further cuts in next year’s budget.
  5. The annual Pentagon budget has grown 23% in real terms since the Sept. 11 attacks, not including funding for Iraq and Afghanistan. The Pentagon’s FY’01 “050” budget (DoD and DoE nuclear weapons-related activities) was $310 billion. Compared to the $421 billion authorized by Congress for FY’05, that’s a nominal increase of $111 billion, or thirty-six percent. In constant FY’05 dollars, the FY’01 budget was $341 billion. Adjusted for inflation, the FY’05 budget is $80 billion above FY’01, a “real” increase of over twenty-three percent.