The White House has begun its rollout of the FY20 federal budget request. As expected, the administration is seeking $750 billion for national defense programs, a 5 percent increase over the FY19 enacted level of $716 billion. The $750 billion covers the broader national security category, which includes the Pentagon, nuclear programs within the Department of Energy, and other defense-related agencies outside of the Department of Defense. The Pentagon alone receives $718 billion in the request, up from $685 billion in FY19.
The $750 billion national security topline figure includes $576 billion in base funding – the most allowed under the Budget Control Act of 2011 – as well as $165 billion for Overseas Contingency Operations and $9 billion in emergency funding for border security and hurricane recovery. The OCO portion of the budget is broken down further into $66 billion worth of traditional OCO funding, and $98 billion to cover base budget priorities in order to sidestep spending limits. OCO is not subject to BCA spending caps, and is being used as a loophole to increase the defense topline. Of course, even the $66 billion is made up of mostly enduring costs that should really be located in the base budget, but have remained in the OCO account for years due to the aforementioned spending limits.
Meanwhile, the budget request cuts domestic discretionary spending to $563 billion, a reduction of around 9 percent. This cut will not sit well with Democrats, who in the past have called for comparable increases to defense and non-defense programs. In previous years, lawmakers have reached several budget deals to alter BCA caps that included parallel increases for defense and non-defense programs. Democrats have indicated that they expect no different during the FY20 budget process, and have already chastised the proposed OCO loophole for defense.
At the federal level, the budget’s $4.7 trillion in spending and $3.6 trillion in projected revenues results in a $1.1 trillion deficit in FY20, followed by two more years where the deficit remains above $1 trillion. In reality, the budget shortfall could go even higher if a budget deal is reached to offset some of the domestic spending cuts. Although less attention has been given to deficits in recent years, shortfalls of this size will place increased strain on future outlays.
The FY20 budget request is being rolled out in stages, with the initial documents being released on March 11. Additional information is being made available on the 12th, but detailed justification documents will not be released until Monday the 18th.