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  • October 2014
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Defense Budget on the Rise

It is ironic that during a time of national debate over how to reduce government spending that the budget for the Department of Defense (DOD) is projected to increase by $40 billion over the next five years.  On June 30, 2011 the Congressional Budget Office (CBO) announced this projected budget growth would occur because of increased costs for weapons systems and health care.  Despite an effort by Pentagon officials to reduce military spending, the CBO estimated fiscal year (FY) 2016 spending to be $25 billion higher than reported by the DOD, at a total cost of $594 billion.

The CBO report examines both the high cost of healthcare for the DOD and regular cost overrun s of weapons development programs.  According to the CBO, the final costs of attaining weapons have been 20 to 30 percent greater than original Pentagon estimates.

In addition to concerns regarding weapons costs, the Military Health Care System also contributes to spiraling defense costs.  The FY 2012 Military Health Care System request for $51 billion accounts for approximately 9 percent of the total DOD base budget.  The CBO calculates that by 2030 these health-care costs will reach $92 billion if action is not taken to curb program growth.  This figure means that, at the current rate,DOD health care costs will nearly double in the 18 year span from 2012 to 2030.  From 2006 to 2010 Defense healthcare spending on drugs experienced a 2.2 percent growth each year, whereas the national average grew 1.2 percent per year.

Military personnel costs are expected to increase by $5 billion in the next five years, with procurement expenses increasing by $36 billion according to the CBO report.  The CBO also predicts a $26 billion growth in Operation and Maintenance, which accounts for the majority of the DOD healthcare program.

Citizens Against Government Waste (CAGW) recommended in Prime Cuts 2011 that the DOD achieve savings in a number of areas.  To start with, the DOD should eliminate funding for the Medium Extended Air Defense System (MEADS).  This system can be replaced by the more cost efficient Patriot Missile System, which has been used by the United States and its allies for years.  MEADS is 10 years behind schedule and is plagued with cost overruns of $2 billion.  A March 9, 2010 Washington Post report quoted an internal U.S. Army memo asserting that the program “will not meet U.S. requirements or address the current and emerging threat without extensive and costly modifications.”  The elimination of MEADS would result in a one-year savings of $546.9 million.

Additionally, DOD costs could be lessened by reducing cost growth in the Major Defense Acquisition Portfolio (MDAP) by 20 percent over five years.  The MDAP is made up of 98 defense programs that require either a total expenditure of more than $365 million for research, testing, development, and evaluation, or more than $2.19 billion for procurement.  A March 2011 GAO report stated that “the total acquisition cost of the programs in DOD’s 2010 portfolio has increased by $135 billion, or 9 percent, over the past 2 years, of which $70 billion cannot be attributed to changes in quantities of some weapon systems.”  This $70 billion in cost growth is due to “poor management and execution.”

Cost overruns and escalating health care costs have continually been the driving forces behind Pentagon budget increases.   Elimination of MEADS and reduction of cost growth in the MDAP represent two areas the DOD could achieve savings for taxpayers.

 

 

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