Pentagon Crafting Next Budget Close to This Year’s $704 Billion

(Bloomberg) -- Pentagon officials are crafting a fiscal 2022 budget plan that assumes the military will receive $704 billion to $708 billion, essentially a flat budget instead of the increase anticipated under former President Donald Trump, according to three current or former defense officials.

The previous administration had announced that it would propose about $722 billion for the Defense Department in the year that begins Oct. 1, although lawmakers of both parties have predicted less would be available amid competing spending demands and rising deficits from Covid-19 relief packages.

“The important signal” of a $704 billion number “is that the administration is content in operating with a flat budget,” said Frederico Bartles, a defense budget analyst with the Heritage Foundation, which is pushing for higher levels. Citing added assignments to the Pentagon, including responding to the coronavirus pandemic and climate change, he said “the administration’s math seems to be that the Pentagon can do more without extra resources.”

The Pentagon-only budget doesn’t include defense spending that goes to other agencies, primarily to the Energy Department, which maintains the nation’s nuclear weapons.

A “topline” of $704 billion to $708 billion under President Joe Biden would amount to a decrease of about 2% in real terms, adjusting for inflation from this year’s enacted appropriation of about $704 billion. That’s in contrast to real growth of 3% to 5% first endorsed by then-Defense Secretary Jim Mattis in 2017, then by the National Defense Strategy Commission in 2018 and last week by a group of GOP defense hawks led by Representative Mike Rogers of Alabama, the top Republican on the House Armed Services Committee.

Pentagon personnel are working under “not to exceed” guidance from the Office of Management and Budget rather than the formal “passback” that sets the budget specifics and hasn’t yet been provided, according to a former defense official privy to the current planning. The Pentagon budget request is expected to be released on May 3.

No Caps

The fiscal 2022 budget will be the first in a decade in which defense and non-defense spending aren’t constrained by budget caps, meaning that Congress has an opening to shift funds from defense to non-defense spending or the reverse.

Congressional math is likely to prevent Democrats from taking a scalpel to the Pentagon’s budget. Senate committees are evenly split among Democrats and Republicans, so every proposal would have to attract Republican votes. Senator Bernie Sanders, the Vermont independent who now leads the Budget Committee, has long called for cutting the defense budget by 10%.

“I would say absent a new shooting war or new threat” the fiscal 2022 defense-only budget “is likely to settle around the FY21 actuals,” said Arnold Punaro, chairman of the National Defense Industrial Association.

As usual, the president’s overall budget request will be “the opening round of negotiations on those spending levels,” said David Berteau, president of the Professional Services Council, an industry group.

Defense Department officials have called for taking a hard look at continued spending on older “legacy” weapons systems, but defense contractors and lawmakers typically resist efforts to phase out programs already providing funds and jobs.

Democrat Jon Tester of Montana, chairman of the Senate Defense Appropriations subcommittee, said he doubts the defense budget will be reduced -- or increased -- significantly.

“Do I think we are probably going to be running about where we are right now?” he said in an interview last week. “Unless there is another program coming in that I don’t know about that’s a big deal, what I’m hoping is we end up right about where we are right now and demand more efficiencies.”

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