Since dollars are policy in U.S. national security, it is not surprising that, given the Russian invasion of Ukraine, the increasingly aggressive Chinese behavior toward Taiwan, and the escalating federal deficit, the Fiscal Year 2024 (FY2024) defense budget proposed by the Biden administration has provoked comments from all parts of the political spectrum. To put these comments in perspective, it is important to analyze at least ten major questions that, as we previously noted, President Joe Biden had to answer in formulating his proposed defense budget.
First, in deciding on the size of his FY2024 defense budget increase, would Biden use the $813 billion he originally proposed for FY2023 as a base? Or would Biden use the $860 billion, which was approved in the National Defense Authorization Act (NDAA) for FY2023?
For FY2024, Biden used the latter—the congressionally approved FY2023 level of $858 billion—as a base and proposed a total budget for FY2024 of $886 billion, an increase of 3.2 percent. Had he used his $813 billion as a base, his budget proposal would have amounted to $47 billion less. Even if Congress does not add to his FY2024 proposal, which appears unlikely, this would mean that, since the Biden administration came into office, the defense budget will have grown by $146 billion, or 20 percent. This is exclusive of the military assistance to Ukraine, which now amounts to over $50 billion, and nearly all of the weapons going to Taiwan. Moreover, it does not include the $100 billion the federal government spends each year amortizing the military retirement system and the approximately $325 billion the Veterans Administration will spend in FY2024. As the Pentagon comptroller noted, the United States is inevitably moving toward a trillion-dollar defense budget.
Second, after deciding on the base, which rate of inflation would the Biden administration use to determine whether to maintain the current spending level in real terms, as he did last year, or potentially provide a real increase, as Congress did previously? The yearly inflation rate in January 2022 was 6 percent, the second highest in forty years. Even with no real growth, a 6 percent increase above the amount Biden requested for FY2023 means an FY2024 budget request of about $870 billion. Using the NDAA level as a base would have resulted in a budget request of approximately $900 billion.
For FY2024, Biden assumed an inflation rate of 6 percent. Using an inflation rate of 6 percent and the Congressionally approved budget for FY2023 as a base would have meant a proposed budget of $912 billion for FY2024. Therefore, in real terms, the FY2024 Defense budget is $26 billion below the FY2023 level.
Third, in addition to deciding on which base and which rate of inflation to use in determining the top line, Biden had to take into account at least three different perspectives from members of Congress. First, that of the members of the House Republican Freedom Caucus, the Democratic Progressive Caucus, and sixty-two religious groups, who want to return the FY2024 defense topline to the FY2022 level of $775 billion. While many see this as an extreme measure, it is important to keep in mind that this figure would be $35 billion, or 5 percent, above the Trump administration’s last budget. It is also more than twice as much as China and Russia combined are spending on defense, and about the same amount Biden himself had projected in his first year in office. While many would argue that the Russian invasion of Ukraine and China’s aggression toward Taiwan have significantly changed the international environment, it is important to remember, as noted above, that U.S. support for Ukraine is funded separately from the regular defense budget and that Taiwan is paying for almost all of the weapons.
A second group consists of those members who rely on the unfunded priorities list. These priorities, which by law must be submitted directly to Congress by the services and the combatant commanders, outline those programs that the Secretary of Defense eliminated from their original budget request. For FY2023, this list contained $21 billion in unfunded priorities, most of which were added to Biden’s FY2023 proposal. For FY2024, the list amounts to “only” $17.1 billion. However, this amount does not include the list from the Cyber Command, the National Guard Bureau, the Strategic Command, and the Missile Defense Agency.
A third group is composed of the defense hawks, who, given the Chinese military build-up want to increase defense spending from its current level of 3 percent of GDP to as much as 5 percent.
Fourth, would the Biden administration finally release its budget in a timely manner? During Biden’s first two years in office, the administration released its budget more than a month later than the normal practice. Such tardiness makes it much more difficult for Congress to pass the budget before the start of the fiscal year. This is particularly difficult for the Department of Defense, since, until a budget for the new fiscal year is passed, the Pentagon can only spend at the previous year’s level and not start any new programs, leading to a significant amount of waste and mismanagement.
Biden released his budget proposal on March 13, which is a month after the due date and makes it likely that Congress will only pass a continuing resolution for at least the first part of the new fiscal year, making it more difficult for the military to spend these funds efficiently and effectively.
Fifth, in addition to deciding on the base and the inflation rate, the president had to decide on the rate to increase military pay. The current basis for raising active-duty pay is the Employment Cost Index (ECI,) which as of September 30, 2022, was 5.2 percent compared to 4.6 percent a year before. This would be the highest raise in thirty years. For retired pay, the average cost of living increased by 8.7 percent from July to September 2022. No administration is bound by law to implement these levels, but most administrations do since they have a large impact on recruiting and retention. Since pay and benefits already consume one-quarter of the total defense budget, how much Biden raised them will have a significant impact on how much is left for investment in current nuclear and conventional procurement and research programs.
Biden proposed a raise that used the September 2022 ECI as the basis and proposed 5.2 percent pay raise for uniformed military and civil servants and 8.7 percent for military retirees. However, some critics, who support a larger raise, have pointed out that, since FY2021, military pay has increased by only 10.7 percent, while inflation has totaled 16 percent, and military housing allowances have dropped from 100 percent of rent and utility costs to 95 percent. These policies have contributed to the crisis in recruiting and retaining a sufficient number of qualified women and men in the active and reserve forces.
Sixth, after deciding on the base, would Biden increase the budget by just enough to keep pace with inflation, or would he accept a real increase of 3 to 5 percent, which some in Congress, including many in his own party, said is necessary to keep up with the growing threats from Russia and China? Increasing the budget by such in real terms, with an inflation rate of 6 percent and using the FY2023 NDAA as a base, would have resulted in an FY2024 defense budget request of about $922 billion—$110 billion more than Biden requested just a year ago, and $136 billion above what he proposed for FY2024.
Seventh, would Biden make any changes in the strategic and tactical nuclear weapons programs now that he has completed his Nuclear Posture Review? In his first two budgets, Biden ignored his own campaign pledges and the Democratic Party 2020 platform, which called for reducing overreliance and excessive dependence on nuclear weapons. Instead, in his first budget, Biden actually embraced the proposal he inherited to rebuild and modernize all three legs of the strategic nuclear triad—at a cost of $1.7 trillion—and provided funding for three new tactical nuclear weapons, including the low-yield nuclear cruise missile. Last year, Biden did try to cancel the low-yield warhead but was overridden by Congress.
The Democratic platform characterized the Trump administration’s nuclear proposal, as unnecessary, wasteful, and indefensible. Moreover, while running for president, Biden himself pledged to dismantle America’s commitment to increasing the role of nuclear weapons. Many of Biden’s supporters had hoped that his pledges would lead to his cutting back or even eliminating the land-based component of the strategic nuclear triad, which will cost $264 billion to maintain and modernize. Biden’s Nuclear Posture Review did not make such a recommendation.
The most likely cuts they suggested would be canceling one or more of the three tactical nuclear weapons programs: a new nuclear-armed cruise missile now in the research phase, a Cold War-era thermonuclear bomb, and a new low-yield warhead that the Trump administration wanted to deploy on attack submarines.