U.S. Department of Defense - January 2012

The Defense Department’s current strategic guidance was driven by the approaching end of a decade of war, a changing technological and geopolitical landscape, and the national security imperative of deficit reduction. The Department’s investment choices for FY 2013-2017 were derived from this guidance and conform to the 2011 Budget Control Act’s requirement to reduce Defense Department future expenditures by approximately $487 billion over the next decade or $259 billion over the next five years. Reflecting these reductions, the Department will request funding of $525 billion for FY 2013, rising to $567 billion by FY 2017.

Achieving these savings is hard, but manageable. It is hard because we have to accept many changes and reductions in areas that previously were sacrosanct. Collectively, the changes align our investments to strategic priorities and budgetary goals, but individually, each one requires a difficult adjustment. It is manageable because the resulting joint force, while smaller and leaner, will remain agile, flexible, ready, innovative, and technologically advanced. It will be a force that is:

• Adaptable and capable of deterring aggression and providing a stabilizing presence, especially in the highest priority areas and missions in the Asia-Pacific region and the Middle East, while still ensuring our ability to maintain our defense commitments to Europe and other allies and partners
• Ready, rapidly deployable, and expeditionary such that it can project power on arrival
• Capable of defending the homeland and providing support to civil authorities
• Possessing cutting-edge capabilities that exploit our technological, joint, and networked advantage
• Able to reconstitute quickly or grow capabilities as needed
• Above all, manned and led by the highest quality professionals

After every major conflict, the U.S. military has experienced significant budget draw downs. The new budget level for the Defense Department will rise from FY 2013 to FY 2017; however, total U.S. defense spending, including both base funding and war costs, will drop by about 22% from its peak in 2010, after accounting for inflation. By comparison, the 7 years following the Vietnam and Cold War peak budgets saw a similar magnitude of decline on the order of 20 to 25%.

However, there are several significant differences between the circumstances we face today and the post-Cold War drawdown. On the positive side, in contrast to the end of the Cold War when the reductions came entirely out of the base defense budget, under the new plan the base budget will roughly match or slightly exceed inflation after FY 2013. The cuts from today’s overall defense spending levels are coming primarily from reduced war-related requirements and are reflected in lower OCO budget levels. On the other hand, while the Cold War drawdown occurred as America’s major military rival was in severe decline, today the U.S. military is still fighting in Afghanistan, countering violent extremism in other areas, and confronting a variety of emerging security challenges. Moreover, the post-Cold War drawdown was preceded by a decade-long defense build-up that emphasized procurement and modernization, resulting in a smaller but mostly new, relatively unused, and technically superior inventory of U.S. military equipment. By contrast, notwithstanding the large budget increases in the base defense budget over the past decade – including funding for weapons development and acquisition – we still have significant gaps in modernization that will need to be filled in coming years.

To view the full document at the source publication, go to http://www.oea.gov/index.php?option=com_docman&task=doc_download&gid=1102&Itemid=33.

The information above is for general awareness only and does not necessarily reflect the views of the Office of Economic Adjustment or the Department of Defense as a whole.