The Congressional Budget Office presentation outlines the budget challenges facing the Department of Defense over the next decade given fiscal constraints. It discusses four approaches to scaling back the DoD's budget plans to close the $60-90 billion annual gap between planned spending and budget caps: 1) preserve force structure but cut acquisition and operations, 2) cut acquisition/operations and phase in force structure reductions, 3) achieve savings primarily through cutting force structure, or 4) reduce force structure under modified budget caps. Specific impacts like reductions in active brigades, carriers, and aircraft squadrons are illustrated under different options.

1. 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

2. Outline
• Fiscal Situation
• Implications of Budget Control Act
• Internal Pressures on DoD's Budget
• Approaches for Scaling Back DoD’s Plans
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3. 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.
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4. Outline
• Fiscal Situation
• Implications of Budget Control Act
• Internal Pressures on DoD's Budget
• Approaches for Scaling Back DoD’s Plans
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5. 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
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6. Outline
• Fiscal Situation
• Implications of Budget Control Act
• Internal Pressures on DoD's Budget
• Approaches for Scaling Back DoD’s Plans
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7. 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
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8. 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
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9. 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
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10. 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
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11. 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
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12. Outline
• Fiscal Situation
• Implications of Budget Control Act
• Internal Pressures on DoD's Budget
• Approaches for Scaling Back DoD’s Plans
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13. CBO Examined Four Approaches to
Scaling Back DoD’s Plans ($90 billion/year gap)
Sources of Reductions (Billions of 2013 dollars)
Option 1:
Preserve Force Structure; Cut Acquisition and Operations
140
Option 2:
Cut Acquisition and Operations; Phase in Reductions in Force Structure
140
120
120
100
100
80
80
60
60
40
40
20
20
0
0
140
Option 3:
Achieve Savings Primarily by Cutting Force Structure
Option 4:
Reduce Force Structure Under a Modified Set of Budget Caps
140
120
120
Reductions
Required Under
Existing Caps
100
80
100
80
60
60
40
40
20
20
0
0
2013 2014 2015 2016 2017 2018 2019 2020 2021
Reduction from Cuts to Operations
2013 2014 2015 2016 2017 2018 2019 2020 2021
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
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14. Illustrative Force Structure Reductions for
Selected Unit Types Under CBO Options
Active and Reserve Units under DoD’s Plans for 2017
BCTs
Planned force,
2017
Carriers
66
11
Amphibious
Marine
Ships
Regiments
33
Fighter
Sqdns**
Airlift
Sqdns**
93
20
11
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
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15. 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)
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