This post kicks off the start of our budget breakdown! We'll start with three weeks about defense spending and then move to other parts of the budget like healthcare and education. If you have any questions or are interested about hearing us speak about this on a podcast, let us know in the comments or via email!
For fiscal year (FY) 2019, the President’s budget request was for $686.1 billion US dollars. From last year, that’s an increase of 5 percent from the President’s 2018 Budget and an increase of 10 percent from last year’s Continuing Resolution (CR). Although the budget this year marks a reverse in a 7-year-decline, defense spending is still a relatively small amount of the US economy. Think back to World War II: defense spending was 35.5 percent of the US economy. Since the 1950s, it has hovered below 10 percent. In FY 2019, the budget reflects defense spending as 3.1 percent of US GDP. Any historical comparison, however, should be treated with caution. Due to inflation, pay raises and unforeseen circumstances —- it is likely that each budget is likely to be ‘the biggest ever.’ It is also difficult to place the current administration in either a wartime or peacetime environment as the US currently has over 90,000 troops abroad but is not engaged in serious combat as it was in World War 2 or the Vietnam War.
Under the Budget Control Act of 2011, discretionary spending was supposed to sink to historically low levels as a share of our national economy. This law imposed limits on such spending through 2021. Since the actual implementation of defense sequestration in 2013, defense spending has actually somewhat decreased. In the FY 2010-2012, the overall funding for the Defense Department (DOD) was over $640 billion. During the next four years, funding for the DOD dropped significantly to under $600 billion per year. While $600 billion is nothing to scoff at, the decrease of $40 billion is also no less important.
However, that is beginning to change. In FY 2017, defense spending came in at $606 billion, the next year $612 billion and in FY 2019, the budget puts defense spending at $686 billion. By 2023, spending for defense is expected to rise to $742 billion. That is $51 billion higher than the budget in 2010. In other words, the era of sequestration is over.
With every budget comes new priorities. For this President, one of his main priorities is investing in Defense. It follows, then, that defense spending would increase. From 2017’s continuing resolution, the budget for 2018 allocated $639 billion for the DOD, a $52 billion increase from the previous year. That money will be spent ”rebuilding, modernizing, and preparing our Armed Forces for the future so that our military remains the world’s preeminent fighting force and we can continue to ensure peace through strength.”
Of the many ways that the President can reinvest in Defense, budget documents have outlined three key strategies: reversing defense sequestration (triggered in 2013), filling critical gaps and building war-fighting readiness and implementing defense reform. As mentioned before, that includes a $52 billion increase in funding for the DOD and a $2 billion increase for national defense programs. That funding will go to implementing a full Readiness Review of the troops, which will cost $21 billion, depot maintenance, shipyard requirements, training and cyber warfare. The DOD also hopes to hire 56,400 more Marines, Soldiers, Sailors and Airmen. While all of this funding will be used for these purposes, the budget also called for reducing the costs of military programs and HQ activities by 25 percent.
Despite documents that state the increase in defense spending will be offset with targeted reductions elsewhere, this new budget will eliminate the defense sequester and raise the cap on defense discretionary spending, and in doing so, increase the deficit. Between 2018-2022, the deficit will have risen by $245 billion but between 2018-2027, it will have risen by $469 billion.
Part One of Three
The US Budget is one of the most talked about and least understood parts of how the American government functions. And it’s no surprise; budgeting is difficult and complex. Imagine your own personal budgeting process and multiply it times 300 million. The number of actors needed for that can’t just be one person, which means the sole power doesn’t directly go to the President.
The Constitution actually ascribes the vague “power of the purse” to Congress. In other words, Congress has the ability to collect taxes, to create taxes and to borrow money. However, as the founders found in many cases, the details of that process remain unclear. Consequently, the process has evolved with our government.Now, there are a series of federal agencies whose sole purposes are to create the budget. They include the Office of Management and Budget (OMB), the Government Accountability Office (GOA) and the Congressional Budget Office (CBO).
Every year, Congress goes through the appropriation process and passes a series of appropriation and authorization bills. Appropriation bills state how much money is allocated to a particular department. Authorization bills actually give the government permission to spend that money.
The Five Steps in the Federal Budget Process
If the budget is not complete by October 1 and it rarely is, then Congress must pass Continuing Resolutions so that federal agencies can still receive funding while negotiations are ongoing. You might remember 2013 where the government shut down. Those were situations when an agreement was not reached and funding was shut off to federal agencies. In fact, Congress has only passed all twelve regular appropriation bills four times between 1977-2012. If Congress can’t decide on twelve separate appropriations bills, they can also pass an omnibus bill - one bill that encompasses twelve funding areas.
Here at Sub-Stances, we’re going to be diving into what makes up the budget, how the funds are redistributed and providing some transparency to the budget process itself. The budget is an important process and one that many Americans only have a surface understanding of. Over the next few months, we’ll be breaking down each segment of the budget and bringing everything into layman’s language. Look forward to deep dives on defense, energy, social security and many more!
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