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Obama's 2014 Budget Preview: The Pentagon


Michael Tasselmyer
April 9, 2013

On the eve of the President's Fiscal Year 2014 budget request, recently confirmed Secretary of Defense Chuck Hagel is warning Pentagon officials to prepare for significant cuts to military and defense programs, while President Obama is likely to push for a return to pre-sequestration funding levels.

While the specifics remain to be seen, it appears that some of the programs on the chopping block include missile defense systems, base closures, and weapons acquisition costs.

According to Bloomberg News, the Pentagon will request $9.16 billion in funding for missile defense systems in 2014, down roughly $550 million from last year's $9.71 billion request. That decrease, while not small on its own, represents just 0.1 percent of the anticipated total Department of Defense (DoD) budget request of $526.6 billion.

A major contributor to DoD budgetary growth is the cost of acquiring new high-tech weapons systems. A March 2013 Government Accountability Office (GAO) report showed that 86 major defense acquisition programs identified in 2012 are projected to cost over $1.6 trillion. Of those programs, the 10 most expensive alone accounted for 65 percent of the total required acquisition and development spending.

GAO has also shown that the DoD could stand to acquire weapons systems and award defense program contracts on a more competitive basis. According to the above-mentioned report: "Only 17 of the 40 (43 percent) current major defense acquisition programs and 7 of the 17 (41 percent) future programs we assessed reported that they have acquisition strategies that call for the use of competition throughout product development... ." Another GAO report from March 2013 indicates that competition for the $359 billion in contracts that DoD awarded last year is lower than it has been in five years, even though "[c]ompetition is the cornerstone of a sound acquisition process and a critical tool for achieving the best return on investment for taxpayers."

Of course, weapons systems costs are only part of the story when it comes to defense and military funding issues. A significant portion of defense-related funding goes towards veterans' health benefits and the human costs associated with maintaining a military force.

Early reports suggest the Veterans Affairs budget will request a discretionary budget of $63.5 billion, 4 percent higher than what President Obama approved last month. In light of a backlog in benefits claims, the VA budget will include a request to quadruple the funding for a paperless claims system, totaling $155 million. Mental health services designed to help veterans facing post-traumatic stress could increase by as much as $7 billion (7 percent above enacted 2013 funding).

Whatever specific funding the President requests for the Department of Defense in his new budget, it's clear that if the recent sequestration spending cuts remain in place, he will have to significantly rethink the DoD's funding going forward. The CBO has estimated that the DoD will have to cut about $74 billion per year to comply with the spending caps. That could prove difficult for DoD, an agency that consistently appears on GAO's "High Risk" list and which "is one of the few federal entities that cannot accurately account for its spending or assets."


 

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