Defense Budget Tutorial #1

February 2nd, 2006 - by admin

Winslow Wheeler / Center for Defense Information – 2006-02-02 23:03:41

Defense Budget Tutorial #1:
What Is the Actual Size of the 2006 Defense Budget?

Winslow Wheeler / Center for Defense Information

(January 19, 2006) — On Dec. 21, 2005, Congress passed a defense appropriations bill, which according to the press releases of the House and Senate Appropriations Committees, and many news articles subsequently written, funded “defense spending” for the United States for the current fiscal year, 2006.  The impression made by the press releases and the news articles was that the $453 billion advertised in the bill, H.R. 2863, constitutes America’s defense budget for 2006.[1] 

That would be quite incorrect.  In fact, the total amount to be spent for the Department of Defense in 2006 is $13 billion to $63 billion more, the latter figure assuming full funding for the wars in Iraq and Afghanistan.  If you also count, non-DOD “national defense” costs, add another $21 billion, and, if you count defense related security costs, such as homeland security, the congressional press release numbers are more than $200 billion wrong.

Having observed, and in past years participated in, the obscuration of just how much the United States actually spends for defense, this author believes it would assist the debate over the defense budget in this country by identifying its actual size.

The “defense spending” bill enacted in December had the title, “Making appropriations to the Department of Defense for the fiscal year ending September 30, 2006 and for other purposes.”   It was a little heavy on those “other purposes” [2] and it did not comprise all the money the Defense Department received and will receive for 2006.   

To peer through the opaqueness of congressional defense appropriations, it is necessary to run through the numbers; all the numbers.

The first step is to understand the “defense spending” bill, H.R. 2863, as enacted:

• Division A of the bill appropriated $453.3 billion, but not all of it for DOD.  $522 million went to the CIA for unclassified “intelligence community management” and to the Coast Guard. This makes the DOD total in Division A $452.8 billion.[3]

• Division B, Title I, Chapter 1 of the bill adds to DOD $4.4 billion for its expenses to rescue and relieve civilians and to undo damage to DOD contractors from Hurricane Katrina.

• Chapter 7 of Division B adds another $1.4 billion to rebuild DOD facilities damaged by Hurricane Katrina.

• Division B, Title II, Chapter 2 adds $130 million for DOD work for protection from the threat of the Avian Flu pandemic.

• Division B, Title III, Chapter 2 cuts the DOD budget by $80 million in rescissions (cancelled spending).  More importantly, Chapter 8 in this title cuts DOD, and all other federal spending, except the Department of Veterans Affairs and “emergency” spending, by one percent “across the board.”  The cut is mandated to occur in every single program of the affected accounts, nothing is exempted. The reduction to DOD is $4.0 billion.

The actual total for DOD in the bill is $454.8 billion, over a billion more than what the appropriations committees implied.

But that’s not all for the Defense Department’s budget.  Add $12.2 billion for military construction. 

For reasons of politics and jurisdiction, Congress appropriates money for the Defense Department in two separate bills: the Department of Defense Appropriations bill and the Military Construction Appropriations bill — which these days is also wrapped in with other spending, such as the Department of Veterans Affairs.  The “MilCon” bill funds military bases in the states and districts of almost every member of Congress.  A major Capitol Hill activity is writing press releases for local newspapers about the goodies the senators and representatives add for their military facilities back home.  They also write press releases about the goodies they add in the DOD appropriations bill.  (Having two bills to write press releases about is better than one.)

So, that gets DOD spending for 2006 to $466.7 billion.  That’s all, right?

Nope.  Add about another $50 billion for the wars in Iraq and Afghanistan. 

There is already $50 billion for Iraq and Afghanistan in the $466.7 billion appropriated in H.R. 2863.  However, war spending in 2005 was over $100 billion, and most expect 2006 to cost at least as much. Nonetheless, Congress decided to provide just $50 billion for ongoing military operations, about enough money for the first six months of the fiscal year.  It will run out in about March 2006.  Before then, Congress and the president will need to add more, up to another $50 billion.  It is that amount that Pentagon and congressional officials privately say they anticipate will be added in a “supplemental” appropriations request in early 2006.[4]

OK, that gets the total to $516.7 billion.  Done now, right?

Nope.  There are other defense activities in the Department of Energy to keep America’s nuclear arsenal reliable and effective and to develop new nuclear weapons.  Add another $16.4 billion.

There are also defense related costs in the Selective Service, the National Defense Stockpile, parts of the General Services Administration, and other miscellany.  Add still another $4.7 billion.

That gets the total to $537.8 billion.  This figure constitutes the “National Defense” budget function (known to budget geeks as budget function “050”) in presidential budget requests and congressional budget resolutions.

You may also want to count even more spending, such as the costs of the Department of Homeland Security, which is certainly national defense in a generic sense.  Add about $41 billion. [5]  You might also want to consider some of the human consequences of current and previous wars; add about $68 billion for Veterans Affairs.  Also, consider adding the costs of reconstruction in Iraq and Afghanistan which counts in the State Department’s budget, plus all the other costs for international security, diplomacy, and foreign aid, as administered by Condoleezza Rice; add about $23 billion.

If you count all these costs, the total is $669.8 billion.

This amount easily outdoes the rest of the world.  In fact, if you count just the costs of the National Defense budget function, the approximate $538 billion we spend is $29 billion more than the $509 billion the entire rest of the world spends. [6]  

Pick the number you believe to be most appropriate for “defense spending” in 2006.  Presumably, you will not be using the $453 billion widely advertised by Congress and the press.  Now, there can be an accurate debate on whether this budget is too large or too small. Please proceed.

Confused by this welter of numbers?  Not surprising; below are the important parts in table form.

US Defense and Security Spending
Fiscal Year 2006

[Funding Source: $ Billions and Purpose]
• H.R. 2863: $454.5 billion.
Grand total for the Department of Defense Appropriations Act, but not all Congress has appropriated to DOD
• H.R. 2528: $12.2 billion.
Military Construction Appropriations
• DOD and MilCon Appropriations bills: $466.7 billion.
Total appropriated to date to DOD
• Likely 2006 Supplemental: $50.0 billion.
Possible amount to complete Iraq/Afghanistan war costs for 2006
• Likely Total for DOD for 2006: $516.7 billion.
Includes probable $50 billion in 2006 Supplemental for Iraq/Afghanistan
• Department of Energy/Defense Activities Appropriations: $16.4 billion.
Funds nuclear weapons activities
• Other non-DOD defense activities: $4.7 billion.
Funds Selective Service, National Defense Stockpile, etc.
• Total for “National Defense: $537.8 billion.
Constitutes the National Defense Budget Function (Budget Function 050) in presidential budgets
* Homeland Security: $41-billion
Approximate amount for non-DOD Homeland Security costs
• Veterans Affairs: $68-billion
Approximate amount for VA costs
I• nternational Security: $23-billion
Approximate amount for reconstruction aid, foreign arms sales, development assistance, etc.
• Total for non-defense but security related costs: $132-billion
Grand Total: $669.8 billion
Total for all international security and defense costs

[1] See Dec. 17, 2005, US Senate Committee on Appropriations, “Conferees Approve FY 2006 Defense Spending Bill.”  See first sentence in addition to the press release’s title.

[2] The bill was passed by Congress on Dec. 21, 2005, and it was signed into law by the president on Dec. 30, 2005.  It is now Public Law 109-148.

[3] To be entirely correct, significant amounts of the funds ostensibly appropriated to DOD are actually for the various US intelligence agencies, some of them outside DOD.  Last year, a defense official accidentally told the press the classified intelligence budget amounted to about $40 billion.  The appropriations for intelligence agencies are buried in various parts of the DOD bill. For example, the account, “Other Research and Development,” for the Air Force might have a few billion for CIA or NSA programs.  The details of these intelligence appropriations are available only to members of Congress and a very small number of staffers.  The paperwork resides in a secure vault in the Capitol building for those cleared members and staff to read; very few do.

[4] As this is written, the press is reporting DOD and OMB to be considering a supplemental of not $50 billion to finish out war funding in 2005 but $80 billion to $100 billion.  Insiders report that the press has this wrong; it is more likely that DOD and OMB will ask for about $50 billion more for 2006 and a “down payment” for 2007 war costs of $40 billion to $50 billion.

[5] This number and those below for the VA and international security are not from congressional budget data but from “The Military Balance 2005-2006,” International Institute for Strategic Studies, Routledge, 2005, p. 42 . The final actuals for these agencies in 2006, including not just appropriations but also “mandatory” or “entitlement” spending, is not available and likely will not be for a few weeks, as of this date.

[6] “SIPRI Yearbook 2005; Armaments, Disarmament and International Security,” Stockholm International Peace Research Institute, Oxford University Press, 2005, p. 310.