White House Proposes $715 Billion Defense Budget for FY22

President Joe Biden delivers remarks to Department of Defense personnel, with Vice President Kamala Harris and Secretary of Defense Lloyd J. Austin III, the Pentagon, Washington, DC, February 10, 2021. – U.S. DoD

The White House has announced that its FY22 budget request will seek $753 billion for national defense, a 1.7 percent increase over the FY21 enacted level. That figure includes the Pentagon budget as well as nuclear programs within the Department of Energy and other defense-related activities outside of the Department of Defense. The portion of the budget set aside specifically for the Pentagon totals $715 billion, reflecting an increase of 1.6 percent over the FY21 enacted level of $703.7 billion. Non-defense discretionary programs would receive $769 billion, an increase of 16 percent compared to FY21. The administration says this increase will bring non-defense programs in line with the 30-year historical average, relative to the size of the economy. The details were part of a budget preview, and a full detailed budget request has yet to be released.

Recent reports suggested the FY22 budget would be flat compared to FY21, perhaps somewhere in the range of $704 billion to $708 billion.  In that regard, the request is slightly more than expected, and may serve as a sign to Republicans that President Joe Biden is standing by previous statements that he did not anticipate significant defense cuts. Still, defense hawks have long called for sustained 3-5 percent real growth for the defense budget, and view the new request as inadequate. At the same time, progressives within the Democratic Party argue that the administration’s military budget is still too large.

The proposed DoD topline is about 1 percent less than the $721.9 billion planned for FY22 under the previous administration. That forecast was generated before the COVID-19 pandemic wreaked havoc on the economy and the federal deficit, but the Trump administration did release a planning framework in December 2020 that still recommended $721.9 billion for the DoD in FY22. That framework outlined planned growth of 2.1 percent per year over the next five years, in line with inflation.

The FY22 budget outline didn’t include any outyear projections, and it’s uncertain if the full budget request will include spending details for the next five years. The FY22 request is effectively a modified version of Trump’s final budget. Next year’s FY23 budget request will be the first budget developed solely under Biden, and give a better idea of the president’s plans for the military over the coming years.

The White House is eliminating the Overseas Contingency Operations (OCO) account, and will integrate both direct war costs and those for enduring operations into the base budget. The OCO account, which has gone by multiple names over the years, was initially created as a way to cover the unforeseen costs of military operations overseas. The account grew to include enduring costs that would remain even if military operations ceased. In the FY21 budget, only one-third of the OCO account was utilized for direct war costs. The OCO account was also used as a loophole to bypass Budget Control Act spending limits, because the war budget wasn’t subject to caps. Integrating enduring costs into the base budget is a particularly welcome move, but it remains to be seen if the budget will be structured in a way that provides a clear view of the direct costs of military operations.

The budget preview contained few details about specific programs, but it did outline a number of the administration’s broad priorities. The document states that countering the threat from China is the DoD’s top challenge, and that the military will continue to “deter destabilizing behavior by Russia.” The FY21 budget request included a significant increase for research, development, test & evaluation in order to develop the kind of advanced systems that would be useful against a near-peer competitor, and the new administration says it will continue to prioritize these RDT&E efforts. At the same time, the White House supports divesting legacy equipment and redirecting savings to new advanced systems. It remains to be seen if Congress will be willing to go as far as the Pentagon wants when it comes to retiring older gear.

The budget plan calls for optimizing shipbuilding, and proposes “executable and responsible investments in the U.S. Navy fleet.” It’s unclear exactly what this means in terms of how the administration will treat the Navy’s latest long-term ship building plan, which calls for a significant buildup of attack submarines, amphibious ships, small surface combatants, and new types of unmanned surface and undersea vessels. The Navy’s shipbuilding plan was developed under the previous administration and is currently under review. The budget plan does specify that work will continue on the Columbia-class ballistic missile submarine and unmanned systems.

The budget will maintain “a strong, credible nuclear deterrent” and supports ongoing nuclear modernization programs. However, the administration is conducting a mandatory nuclear posture review, and changes to nuclear programs could materialize. Investment in long-range fires is highlighted in the budget preview, including the development and deployment of new hypersonic capabilities. The budget will also address climate change concerns, such as the DoD’s ability to respond to more extreme weather events and investing in power and energy research to improve energy efficiency.

The full detailed budget request may not be released until sometime next month or even June. At that point, Congress will have until the start of the new fiscal year on October 1 to either pass a new budget or sign a continuing resolution that would keep the government operating at the previous year’s levels until the actual budget is passed.

About Shaun McDougall

Shaun McDougall is an analyst at Forecast International covering the U.S. and Canadian defense markets.

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