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PRE-DECISIONAL
ASMC 2010 Orlando PDI
Current Budget Issues
June 2010
John Roth
July 21, 2015
PRE-DECISIONAL
B14-10-102 v1.2 Budget Issues PDI Orlando
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PRE-DECISIONAL
FY 2011 Budget Request
FY 2011 Base Budget
3.8%
30.9%
30.9%
Military Pay & Healthcare……………........………............$169.4B
MILCON, Family Housing & Revolving Funds…………...$21.1B
Operations, Readiness, & Support…………….....……...$169.3B
Procurement and RDT&E…..………………….............….$189.0B
34.4%
$548.9B
FY 2011 OCO Funding
83.1%
13.4%
Continuing the Fight………………………..…….......…...$132.4B
Reconstitution…………………………….………………….$21.3B
Additional Requests………………………………....……….$5.6B
$159.3B
3.5%
$708.2B
Numbers may not add due to rounding
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Department of Defense Topline
FY 2001 – FY 2015
FY 2010 – FY 2015
Base Growth
(Current Dollars in Billions)
$750
693
33
667
667
601
$500
437
72
345
316
297
479
91
76
328
3.0%
1.0%
648
50
666
50
159
616
50
632
50
566
582
598
616
FY12
FY13
FY14
FY15
130
166
7
116
3
8
3
17
13
6
$250
468
146
187
535
708
Nominal Growth
Real Growth
377
400
411
432
365
FY03
FY04
FY05
FY06
FY07
480
513
531
549
FY09
FY10
FY11
$0
FY01
FY02
FY08
Numbers may not add due to rounding
Base Budget
OCO Funding
Non-War Supplemental
Base Budget Position
OCO Supplemental
Note:
FY 2011 – FY 2015 reflect levels included in the President’s FY 2011 Budget Request; FY 2009 Non-War Supplemental was appropriated
through the American Recovery and Reinvestment Act of 2009
Source:
Department of Defense Appropriation Acts FY 2001 – FY 2010, FY 2011 President’s Budget documents and OMB Historical Tables,
February 2010
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Pressures on Discretionary Defense Spending
60%
Proposed FY 2011
Total Federal
Budget Authority
$3,690.5B
Proposed FY 2011
Federal Discretionary
Budget Authority
$1,265.0B
DoD Outlays as Percent of GDP
Mandatory &
Other Non-discretionary
Budget Authority
$2,425.5B
66%
50%
40%
WWII
34.5%
30%
Total
Discretionary
Budget Authority
$1,265.0B
34%
20%
0%
1945
Non-DoD
Discretionary
Budget Authority
$556.8B
44%
$708.2B
Gulf War
4.4%
FY11
4.7%
1965
1985
2005
Note: FY 2010 includes $129.6B appropriated and $33.0B OCO supplemental request
Source: OMB Historical Tables, FY 2011 Budget of the U.S. Government,
WWII
100% 82.5%
DoD Discretionary
Budget Authority
$708.2B
56%
Base Discretionary
Budget Authority
$548.9B
78%
Vietnam
8.9%
10%
80%
60%
Proposed FY 2011
DoD Discretionary
Budget Authority
Korea
11.7%
OCO Discretionary
Budget Authority
$159.3B
22%
Korea
57.0%
DoD Outlays and Projected outlays
as Percent of Federal Spending
Vietnam
43.4%
Gulf War
19.8%
40%
FY11
18.7%
20%
0%
1945
1965
1985
2005
Note: FY 2010 includes $129.6B appropriated and $33.0B OCO supplemental request
Source: OMB Historical Tables, FY 2011 Budget of the U.S. Government
Mounting deficits, interest expenses, and entitlement spending
will put downward pressure on defense budgets in the near-term
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Federal Budget Surplus/Deficits
(Percent of GDP)
4.0%
(Dollars in Billions)
$236 (2.4%)
2.0%
0.0%
-2.0%
-4.0%
$459 (3.2%)
$727 (4.2%)
$752 (3.9%)
FY 2013
FY 2015
-6.0%
-8.0%
$1,267 (8.3%)
-10.0%
$1,556 (10.6%)
-12.0%
-14.0%
FY 2000
FY 2008
FY 2010
FY 2011
Source: Represents unified federal deficit and GDP projections reflected in the President’s FY 2011 Budget Request, February 2010
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Decline Coming?
Total Defense Budget Authority
(Constant FY 2011 Dollars)
Billions
800
708.5 708.2
700
622.9
712.1
596.8
600
536.6
533.6
551.8
563.7
523.9
507.0
483.2
500
476.4
399.0
400
473.6
430.5 419.8
457.6
414.5
377.4
360.2 374.7
386.8 395.2
442.1
393.9
396.6 383.7
376.9 371.5
369.7
300
200
187.9
100
0
FY
50
FY
52
FY
54
FY
56
FY
58
FY
60
FY
62
FY
64
FY
66
FY
68
FY
70
FY
72
FY
74
FY
76
FY
78
FY
80
FY
82
FY
84
FY
86
FY
88
FY
90
FY
92
FY
94
FY
96
FY
98
FY
00
FY
02
FY
04
FY
06
FY
08
FY
10
FY
11
Source: National Defense Budget Estimates for FY 2011 (Green Book), March 2010, Tables 1-3, 1-4, and 6.8
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Major Cost Drivers
Taking Care of People


Reshape and Recapitalize
Currently no planned reduction in force structure/end
strength

–

Maintain military pay raises at ECI (Employment Cost
Index) or higher

Healthcare

Civilian pay growth

Disability retirement costs likely to rise

New capabilities
–
–
–
–
5th Gen TACAIR
Nuclear posture review
Long-range strike
Persistent ISR
Procurement needs may be reduced by
cancellations/restructuring
Afghanistan/Iraq

Financing OCO-to-Base


Global posture


Growth required to support approved force structure
Training OPTEMPO
Fuel fluctuations (hard to anticipate)
Maintain complex weapons
FSRM

Policy changes: Wounded warrior, family support, soft
power

Need to plan for annual growth
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Shipbuilding
– But many already accomplished
– Weapons cost growth
Maintain Readiness and Operations
–
–
–
–
Irregular warfare
Ongoing re-capitalization needs
–
– Exceeded GDP deflators by average of 1.2
percentage points in last 5 years

High-priority QDR initiatives
Troop surge
Reset requirements
– Repair or replace theater-provided equipment
– Will occur gradually as equipment returns

Enablers
– MRAPs
– ISR
– Counter IED

Afghan Security Forces

Iraq drawdown
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Need to Continue
To Seek Savings and Efficiencies
• Operational efficiencies
– Overhead/Support
– Insourcing
– Healthcare
– Logistics
– Energy savings
– Others?
• End unneeded or poorly performing programs
• Reform how we do business
– Acquisition reform
– Cost consciousness
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FY 2010 Budget Execution Challenges
• Operation and Maintenance Shortfalls
– Cash flowing contingency operations
– Increased fuel costs
– Congressional reductions
– OPTEMPO demands
• Spouse Tuition Assistance
– Demand far exceeds budget
• Military Personnel
– Reserve mobilization up
• War Fighter Needs
• Haiti Support
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